Domestic equity markets went off on a flight on Friday as benchmark indices rallied sharply on the back of firm global and domestic cues. Dalal Street investors went richer by Rs 4 lakh crore during the trading session as BSE Sensex and Nifty50 rose over 1.5 per cent, each.
Buying was seen across all the sectors, but public sector banks emerged as the standout performers during the day. State-run lenders, which have outperformed the benchmark in the last one year, continued to extend their gains during the session and rallied up to 9 per cent.
Nifty PSU Bank index surged 5.4 per cent during the day, just marginally down from its day’s peak. All the 12 stocks in the index settled higher, with each of them rising more than 4 per cent amid the strong demand by the investors and stock-specific reasons.
The US-based investment firm GQG partners investing Rs 15,446 crores in four Adani stocks might influence the market positively, said the market experts, which may benefit the banking stocks, particularly the public sector banks.
This money is mainly to be used for retiring debt, which means that the banks that had funded Adani companies will not face any stress. This is positive news for Bank Nifty, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “FII selling will be an opportunity for long-term investors to accumulate high-quality stocks, particularly banks.”
According to market analysts, India VIX was close to a multi-month low, dropping over 6 per cent to 12.18-level. Therefore, despite the market’s extremely oversold condition, there was no panic.
After a protracted period of downturn, the market is currently experiencing a significant rebound led by BankNifty. The market’s mood has altered as a result of the global market’s recovery and relief over the Adani case, which is fueling a significant short-covering move, said Parth Nyati, Founder of Tradingo.
“PSU banks will continue to do well since they are fundamentally in a much healthier stage and the prognosis is still positive. In terms of the Nifty PSE index, it is poised for a multiyear breakout, and if it occurs, we can anticipate a significant outperformance in the PSU sector over the course of the next few months,” he said.
Union Bank of India advanced about 9 per cent to Rs 72.80 on Friday as the lender made timely payment of bonds and hosted a number of analysts/investors. It was followed by UCO Bank, which rose over 8 per cent to Rs 28.10, taking its yearly gain to more than 130 per cent.
Rajesh Bhosale, Technical Analyst at Angel One, said the UCO Bank faces key hurdles at Rs 28-30 levels, whereas Motilal Oswal gave a target price of Rs 100 on Union Bank in January 2023.
Bank of Maharashtra and Punjab & Sind Bank jumped 7 per cent, each. Indian Overseas Bank, Bank of India and Indian Bank gained 6 per cent, each. Canara Bank, State Bank of India (SBI) and Bank of Baroda were up by 5 per cent, each.
KR Choksey and Axis Securities, both have a buy rating on SBI with a target price of Rs 750, whereas HDFC Securities has a similar rating but with a target price of Rs 740 on the stock.
According to a report by news agency Reuters, SBI may lower its stake in Yes Bank after a lock-in period, ending March 13, 2023. The SBI board is likely to meet soon to decide on the future of its stake in Yes Bank. The three-year lock-in period was put in place by the Reserve Bank of India (RBI).
In the previous month, Geojit BNP Paribas suggested holding Bank of Baroda with a target price of Rs 182, whereas Prabhudas Lilladher has a buy rating on the stock with a target price of Rs 220. ICICIDirect sees the stock at Rs 200.
LKP Securities has suggested buying Canara Bank. The brokerage firm has a target price of Rs 349 on the stock, whereas Motilal Oswal suggested a buy rating with a target price of Rs 410. JM Financial pegged the stock at Rs 355.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)
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