Shares of State Bank of India (SBI) surged more than 2 per cent in Monday’s trade amid strong buying seen in the banking pack, driven by healthy quarterly results.
The scrip rose 2.54 per cent to hit a high of Rs 540.45 on BSE. The scrip is up nearly 12 per cent so far this calendar year.
Kush Ghodasara, an independent market expert, said, “Fundamentally, SBI has delivered a good performance on the ground level compared with its peers, in terms of easing NPA (non-performing asset) concerns. In the short-term, a correcting stock should be considered as a buying opportunity for investment in the range of Rs 500-525.”
SBI shares are down 9 per cent from their 52-week high of Rs 578.65, hit on September 15. That said, the scrip is trading a little over 24 per cent higher from its March low of Rs 425.
Analysts are expecting SBI to clock a good set of numbers in the September quarter. After a decent set of quarterly figures from the leading IT majors, the banking sector’s numbers also started on a higher note.
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HDFC Bank had on Saturday reported a 20.1 per cent year-on-year (YoY) jump in standalone net profit at Rs 10,605.80 crore for the September quarter. Another lender Federal Bank on Friday had reported a 52.89 per cent jump in its standalone net profit for the quarter.
Emkay Global Financial Services, in its second-quarter (Q2) preview report, stated banking stocks could be considered “a good opportunity to buy.”
“Banking stocks have recently corrected from their Q1 highs due to global spillovers and macro concerns. Though, India’s banking sector credit growth looks high, it is resurrecting from the decadal lows, mainly led by strong consumption demand. Moreover, asset quality is on the mend and the risk of a fresh NPA cycle remains low, leading to lower LLP (Limited Liability Partnership) and thus supporting strong profitability/return ratios for banks,” the brokerage said.
Among the large public sector banks (PSBs), SBI remained the brokerage’s preferred pick.
Meanwhile, Indian equity benchmarks were trading on a higher note, defying global market cues, led by a strong interest in banking stocks.
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