April 30 has been a day of strong gains for the banking sector. The Nifty Bank index and the PSU Bank Index hit new all times highs on April 30. Given the recent spree of interventions by the regulator on private banks and NBFCs, experts feel that public sector banks (PSUs) could be a better way to play the banking theme.
The Nifty Bank Index hit a new all-time high of 49,974.75 on Tuesday April 30, 2024 while the Nifty PSU Bank Index scaled to a new all time high of 7,685.95l.
In the preceding four months, the Nifty Bank Index has surged by more than 6%, while the PSU Bank Index has shown remarkable strength, skyrocketing investor value by nearly 81% in the past year, with a substantial 24% surge recorded in the last three months.
The high demand for capital for infrastructure, which will result in strong credit growth, and improving return on equity (ROE), coupled with the inclusion of Indian bonds in the MSCI Global Bond Index, are expected to make the case for PSU banks stronger.
Analyst on Banking Indices hitting record highs
Commenting on the Banking Indices hitting record highs, Ajit Mishra – SVP, Research, Religare Broking said that “The banking index has reclaimed its record high thanks to noticeable traction in private banking majors. In line with the Nifty, it is also trading in a rising channel on the weekly chart and itching gradually towards the upper band of the same. We are now eyeing the 50,000-50,500 zone to be tested soon, with a strong base at 48,000- 48,500. Participants should prefer private banking majors like Axis Bank, ICICI Bank, Federal Bank and stay selective in the PSU space.”
On the technical side Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said that The Bank Nifty witnessed a volatile trading session during the expiry day, with bulls dominating the first half and bears taking control in the second half. Although the index fell short of reaching the 50,000 mark, the overall sentiment remains bullish.
Shah further said Dips in the index should be seen as buying opportunities, especially with strong support noted around the 49,000 mark, where the highest open interest lies on the put side.