Shares of state-owned lenders Bank of India (BoI) and Bank of Baroda (BoB) jumped up to 8.78 per cent to hit their respective 52-week highs today. Technical charts largely show a ‘positive’ outlook for the two stocks in the medium term. However, “one should not rule out the possibility of profit booking”, said one analyst. The BoI stock looked ‘lucrative’, while BOB was seen as ‘impressive’, the other analyst said. For public sector banks stocks, analyst views suggested a “buy-on-dip strategy”.
Bank of India
BoI jumped for the sixth straight session today. The stock surged as much as 8.78 per cent to hit a day high — also its 52-week high — of Rs 101. It finally settled 7.97 per cent higher at Rs 100.25. A total of 53.61 lakh shares changed hands today on BSE, amounting to a turnover of Rs 52.57 crore. The company’s market capitalisation or m-cap stood at Rs 41,138.25 crore. The stock has gained 21.86 per cent in the last five sessions. On a year-to-date (YTD) basis, it has zoomed 91.64 per cent.
Osho Krishan, Sr. Analyst- Technical & Derivative Research, Angel One Ltd, said, “Bank of India has seen a vertical rally since the low of Rs 46 in October and has soared over 2 times to test three-digit levels. The recent rally has been backed by robust volumes implying inherent strength. However, post such a strong move, one should not rule out the possibility of profit booking or cool-off in the counter. Hence, one needs to trail their stop losses accordingly. As far as levels are concerned, the stock has a resistance near the Rs 104-108 odd zone. On the flip side, the immediate support is placed around Rs 80 odd levels.”
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Anand James, Chief Market Strategist at Geojit Financial Services, said, “Bank of India will face resistance at Rs 101, also its 2020 peak, but if the consolidation thereof doesn’t slip past Rs 90, an extension in an uptrend may ensue, aiming at Rs 111.”
Pavitraa Shetty from Tips2trades, said, “With NPAs being written off and loan demand improving, despite a steady hike in interest rates, have ensured stronger margins for banks including PSU banks. The stock is very overbought technically. Investors should use current levels to exit buy positions and wait for re-entry near Rs 70.”
Manoj Dalmia, Founder and Director of Proficient Equities Private Ltd, said, BoI could move to Rs 107 from its current levels, where it can face some resistance.
Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, said, “The counter is in a pyramidal uptrend. It has already broken a flag formation on the daily chart with a huge volume, which is supporting the current trend. The overall structure of the counter looks lucrative as it is trading above its all-important moving averages with higher highs and higher low formations. On the higher side, the psychological resistance level at any upward move is Rs 100-102, but if it can hold the Rs 102 level, we could see Rs 110 levels in the near to short term. On the downside, a cluster of moving averages around Rs 87 will act as strong support. In the current environment, investors should be advised to use the buy-on-dip strategy in all PSU banks. Because the risk-reward ratio is unfavorable.”
Bank of Baroda
BoB climbed for the fourth straight session today. The stock surged as much as 7.31 per cent to hit a day high — also its 52-week high — of Rs 189.40. It eventually settled 6.54 per cent higher at Rs 188.05. A total of 35.92 lakh shares changed hands today on BSE, amounting to a turnover of Rs 66.36 crore. The company’s market capitalisation or m-cap stood at Rs 97,247.47. The stock has jumped 8.26 per cent in the last five sessions. On a year-to-date (YTD) basis, it has soared 123.63 per cent.
Angel One Ltd’s Krishan said, “Bank of Baroda has seen a vertical rally since the low of Rs 40 in October and has soared over 4.5 times to surpass the critical resistance of Rs 180. The stock has witnessed a magnificent move in the recent period, and thus, the possibility of profit booking or cool-off in the counter can’t be ruled out. As far as levels are concerned, immediate support is placed around the Rs 160-odd zone, breaching which it may test the bullish gap of the Rs 150-zone.”
In contrast, the intermediate resistance is placed around Rs 200 odd levels, he added.
Tips2trades’ Shetty also viewed BoB stock as “very overbought technically”. “A daily close above Rs 180 could lead to a target of Rs 188 in the coming days. Support will be at Rs 160 to re-enter buy positions,” she said.
Geojit Financial Services’ James said, “BoB aims for Rs 197, but visibility past the same is limited. Favoured view expects consolidation or a correction in the next few trading sessions having raced past way too abruptly beyond 2 standard deviation.”
Proficient Equities Private Ltd’s Dalmia, said, BoB has an upside of Rs 200.
Swastika Investmart Ltd’s Gour said, “The counter is flying in a classical uptrend, as it has witnessed a breakout of a downward sloping trendline at around Rs 160 levels with a strong volume on the longer time frame. On the daily chart, it has broken out of a long consolidation upward-sloping channel. The overall structure is impressive, as it trades above its all-important moving averages. The momentum indicator RSI (relative strength index) is also positively poised, whereas MACD (moving average convergence divergence) is supporting the current strength.”
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He further opined that Rs 200 would act as an immediate psychological resistance level on the higher side, and above this, one can expect a move to Rs 224 levels in the near term. On the downside, Rs 167 is the strong support during any correction, Gour added.
Tips2trades’ Shetty also viewed BoB stock as “very overbought technically”. “A daily close above Rs 180 could lead to a target of Rs 188 in the coming days. Support will be at Rs 160 to re-enter buy positions,” she said.
Commenting on the recent rally in PSBs, Rupak De, Senior Technical analyst at LKP Securities, said, the upward trend “was backed by good participation from the investors, making the rally sustainable.”
He stated that the “trend for the medium term looks very positive”. Although the prices “may require a consolidation before a further directional move, De said. “In fact, investors who bought at the lower level would want to take some profit. Therefore, a buy-on-dips strategy would make a good investment in the current scenario,” he added.
“All the PSU banks have moved a lot recently and there is still a lot of steam left. Investors can stay invested with a long-term view as entire PSU bank sector has an upside of nearly doubling from current levels,” Proficient Equities Private Ltd’s Dalmia said.
Meanwhile, Indian equity benchmarks settled on a higher note today, led by gains in state-owned lenders. PSBs such as Punjab & Sind Bank, Central Bank of India, PNB, IOB, UCO Bank, Union Bank and Indian Bank also touched their respective one-year highs today.
