PSU Bank stocks cheer government’s move, sector ends with 3.6% gain

PSU Bank stocks cheer government’s move, sector ends with 3.6% gain

Nifty PSU Bank soars high on government's recapitalisation plan. (Photo: iStock)

New Delhi: Shares of the PSU Banking stocks soared high on Monday after the government last week announced recapitalisation in public sector banks of 70,000 crore.

Shares of Nifty PSU Banks surged 3.58% to close at 2,488.45.

Indian Bank (11.71%), Central Bank of India (10.08%), Allahabad Bank (7.66%), Oriental Bank of Commerce (4.73%) and Jammu and Kashmir Bank (4.42%) were the top contributors on the Nifty PSU Bank sector.

“The public sector bank index has given breakdown from Symmetrical Triangle Pattern and slipped to fresh 3-years low, where its multiple indecisive formations-Doji failed to save the index from extending loss. Downward slopping moving averages post their bearish cross-over and negatively poised key technical indicators (RSI and MACD) signals further decline in the index. However oversold Stochastic oscillator didn’t coincides with further fall, hence near-term rebound cannot be ruled out before the index resumes its southward journey,” Reliance Securities said in a report.

Nifty Private Bank and the Financial Sector also ended with gains, rising 3.65% and 4% respectively.

On Sensex, the BSE Bankex index remained positive with the sector gaining as much as 3.57%.

“The 70,000 crore recapitalisation of PSU banks announced in the budget is being upfronted, although the timeline is not disclosed. Our banking team believes that after accounting for provisioning requirements, this capital can support ~ 3 lakh crore in credit growth (~3% of outstanding credit of PSU banks). More capital may be needed to meet our credit growth estimates,” Emkay Global report stated.

The equity benchmark indices had been in a good mood today though both Sensex and Nifty faced volatility. Sensex closed at 37,494.12, up 792.96 points, or 2.16%, while the 50-stock Nifty closed at 11,057.85, up 228.50 points, or 2.11%.