Union Bank, IOB, UCO Bank, PNB shares fall up to 4% from day's high; is the rally over?

Public sector banks, or the PSU Banks, gave up their initial gains on Friday. Majority of the state run lenders were seen trading in red as the euphoria over RBI's monetary policy settled. However, market experts believe that the momentum in PSBs will continue in the coming months after the current bouts of profit booking.

The banking system’s credit growth remained healthy at 15 per cent on a yearly basis (ex-HDFC) for the fortnight ended September 8, 2023, running above the 12-13 per cent growth noted by Emkay Global in its recent note. Corporate credit showed signs of picking-up along with the retail growth, which was led by unsecured loans and vehicle finance, it said.

Corporate capex demand is rising up well, Emkay said after its discussions with PSBs. However, it is yet to be seen if the momentum will persist, given upcoming elections and the elevated rate environment, it added. "PSBs are showing aggressive growth strides in SME and mid-corporates, given their rate advantage and, thus, reclaiming some ground," it said.

Indian Overseas Bank crashed more than 4 per cent to Rs 45.30 from day's high during the session. The stockh has rallied about 50 per cent in the last one month, while it is up more than 105 per cent in the last six months period. The Central Bank of India also declined more than 3 per cent to Rs 48.70. The stock turned multibagger in the last six months, but is down 5 per cent in a week.

Another retail favourite lender, UCO Bank also posted a fall of about 4 per cent. The stock has rallied about 30 per cent in a month, while it gained more than 70 per cent in the six months period. Union Bank of India, which is up 140 per cent in the last one year, also fell about 4 per cent from day's high.

Other state owned lenders including Punjab National Bank, Indian Bank and Bank of Maharashtra tumbled about 3 per cent each for the day. Indian Bank also dropped 2 per cent for the day, while Punjab & Sind Bank and State Bank of India also eased from their respective day's highs.

However, The Jammu & Kashmir Bank was an exception as the lender managed to hold gains and rose about 8 per cent to hit a 52-week high at Rs 115.90. The stock has rallied about 130 per cent in the last six months and has delivered a return of 300 per cent in the last one year.

Axis Securities is positive on SBI and Bank of Baroda and has suggested to buy with a target price of Rs 715 and Rs 255, respectively. Technical experts are positive on most of the PSU Banks including State Bank of India, Punjab National Bank, Central Bank of India, Union Bank of India and Indian Bank. They have mostly suggested buying these stocks on dips for further upside.

Avdhut Bagkar, Technical Analyst at StoxBox is optimistic on SBI. The price action must surpass the hurdle of Rs 605 to break out on the upside. Successive closes over this threshold should trigger the next breakout, leading the stock toward Rs 640 levels, he said.

He also suggested buying PNB for a target of Rs 95 and Union Bank of India for a target of Rs 125. "Punjab National Bank shares have seen a correction of more than 7 per cent in the last two sessions but the medium-term outlook appears relatively bullish," he added.

Bank of India is indicating a very strong move in the near future. As compared to last quarter, the stock also witnessed a strong volume action indicating a price/volume breakout, said Mitesh Panchal, a Sebi-registered analyst. "One can go long at current levels and on decline for a potential target of Rs 141.75 in 6-9 months," he said.

Union Bank is back on track as far as technical charts are concerned. Strong price action above its immediate strong resistance indicates a further up move in near future, Panchal added with a target of Rs 139.50. "The Central Bank witnessed a very strong price/volume breakout on the quarterly chart. The breakout is nothing but a strong signal of trend reversal and stock from the current level is likely to test a new trading range of Rs 62-67," he added.


Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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