On a day when the benchmark index closed 0.3% lower, the Nifty PSU Bank Index rose 3.5% to 5,215.05 rupees on news of Indian government securities being included in the J.P. Morgan Emerging Markets Bond Index.
“Domestic markets ended on a muted note as mixed signals from US and Asian markets dented domestic investor confidence. Nonetheless, PSU banking stocks outperformed as bond yields fell due to India’s inclusion in the JPMorgan Government Bond Index.” Geojit said Vinod Nair, Head of Research at Financial Services.
Analysts said that while PSU banking stocks underperformed for most of the week, buying interest in the stocks surged on Friday after the news turned the sentiment for the sector better. Barring PSU and PSU banks, all indices fell during the week.
Stock market surges
Banking stocks such as Union Bank, Canara Bank, Bank of Maharashtra, Bank of Baroda, Punjab Sindh Bank and Bank of India led the gains, rising 3.8% to 5.4%. The exception was Central Bank, which closed up 9.06%. All 12 index components rose.
“(A simple reason for the rise in PSU banks) could be that PSU banks hold more than required government securities in their HTM portfolios. That could be the reason why their sentiment is more positive,” said finance head of a large PSU bank express.
However, the Nifty Bank index ended 0.03% lower, while the Nifty Private Bank index ended 0.09% lower.
“The BankNifty index has witnessed a significant double top breakdown pattern, which usually signals a trend reversal. This bearish pattern was largely influenced by selling pressure from HDFC Bank. The index broke above the 20-day moving average at 45,000 levels line (20 DMA),” said Kunal Shah, senior technical and derivatives analyst at LKP Securities.
Analysts have pegged a range for the Nifty Bank Index at 44,000 to 45,500 points.