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PSU bank shares end in red; IOB, UCO Bank, Central Bank fall up to 5%
Shares of all 12 public sector banks witnessed selling pressure on Tuesday, with Indian Overseas Bank, Central Bank, UCO Bank falling up to 5% today. Shares of State Bank of India (SBI), the country’s largest lender, also settled in red, dragging the Nifty PSU Bank index by 1.3%. The weakness in PSU bank stocks can be attributed to profit booking at the current juncture ahead of the outcome of the ongoing Lok Sabha elections due on June 4.
Among the state-owned lenders, UCO Bank was the top laggard with a 4.7% loss, followed by Indian Overseas Bank and Punjab & Sind Bank, which ended down by 4.5% and 4.2%, respectively.
Meanwhile, the index heavyweight SBI closed marginally lower by 0.34%, while Punjab National Bank, the second most valued PSU bank in terms of market capitalisation, closed down by 1.12%. Bank of Baroda, the third most valued state-owned bank, settled with a 2.4% loss.
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Among others, Bank of India, Union Bank of India, Canara Bank, Maharashtra Bank, and Indian Bank also ended in negative terrain, falling in range of 1-2%.
The weakness in PSU banks was in sync with the benchmark indices, which witnessed volatility as investors turned jittery ahead of the general election results, slated to be out on June 4.
The BSE Sensex ended 220 points, or 0.29%, lower at 75,170, and the NSE Nifty settled at 22,869, down by 64 points, or 0.28%. The broader market also seen sharp selling pressure, with midcap and smallcap indices falling 0.63% and 1.09%, respectively. The Nifty bank index ended 0.28% lower at 49,142 mark.
“The Bank Nifty index opened on a positive note but was unable to sustain higher levels, resulting in weakness. Consequently, the index settled the day on a negative note at 49,142. Technically, the Bank Nifty has formed a dark cloud cover followed by a shooting star candle, indicating further weakness. If the index sustains below the low of the shooting star candle 49,051 levels, then weakness could extend further. As of now, the Bank Nifty trend is up, but on the higher side, 49,690 and 50,000 will remain hurdles for the Bank Nifty in the short term,” says Neeraj Sharma, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd.
Vinod Nair, Head of Research, Geojit Financial Services, says that the Indian market exhibited mild consolidation post the recent sharp surge. The uncertainty-led volatility is likely to continue as the market approaches the election outcome, he says.
“Conversely, the underlying earnings growth for the March quarter results so far was largely above expectations, which would likely support the valuation, which is currently moderately above the long-term average. Mid- & small-caps underperformed today, while defensive sectors like Pharma and FMCG were optimistic," adds Nair.
(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)
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