Prior to the Reserve Bank of India's (RBI) bi-monthly policy review decision on the interest rate hikes, which will be released on December 7, shares of public sector undertakings (PSU) banks reached a fresh 52-week high on Tuesday.
Shares of Punjab & Sind Bank rose nearly 15%, Bank of India was up more than 6%, Union Bank of India and IDBI Bank rose nearly 5%, while Indian Bank, Bank of Baroda, and Punjab National Bank rose between 1 - 2.4% on Tuesday intra-day session.
In August 2022 Monetary Policy Committee (MPC) review, the RBI increased repo rate's by 50 basis points to 5.40%.
According to media reports, several analysts predicted that the RBI monetary policy committee will soften its stance regarding the rate hike decision, stating that the central bank will change its stance to 'neutral' from 'accommodative'.
According to Sandip Sabharwal, a Mumbai-based fund manager, inflationary dynamics in India have clearly peaked out. All company commentaries indicate no price increases or infact small decreases going forward. Good Rabi cropping also indicates a good winter crop. Global commodities have also corrected substantially.
In this situation, Sabharwal believes that its better that the Monetary Policy Committee does not hike rates under pressure from what other global central banks are doing. Inflation issue in India is not as severe as in the USA or Europe.
On the technical front, according to analysts, the PSU Bank Index has seen more than 40% return from the start of the October, and similar moves is seen in the PSU stocks.
"The overall trend remains positive, however considering such sharp moves in short span the momentum indicators are in deep overbought, and risk reward for short term is not favorable. Therefore, traders should consider to book at least partial at current levels, and wait for dips to re-enter," said said Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One.
According to Bhosale, the support level and resistance level for Punjab & Sind Bank is 24.3 and 27.8, IDBI Bank's support and resistance level is 53 and 65, Bank of India's support level is 86 and resistance level is 86 and 97, Union Bank of India's support and resistance level is 83 and 92.
For Bank of Baroda support level is 86 and resistance level 95, Indian Bank's support and resistance level is 282 and 300, while Punjab National Bank's support level is 53 and resistance level is 60.
The weekly average delivery volume front, Punjab & Sind Bank is at 31.37%, for IDBI Bank its at 30.27%, Bank of India is at 40.27%, Union Bank of India is 27.97%, Bank of Baroda is at 36.85%. Indian Bank is at 49.39%, and Punjab National Bank is at 28.57%.