Buy PSU Bank ETFs for short-term gains of 10-15%: Analysts

Mumbai: Strong demand for the Canara Bank qualified institutional placement (QIP), depressed valuations and technical breakouts triggered a sharp rally in state owned banks Tuesday, with the Nifty PSU Bank index gaining over 7 per cent, its biggest advance since June 1.The rally in PSU banks is set to continue and investors can either buy PSU bank ETFs such as Nippon India ETF PSU Bank BeES or Kotak PSU Bank ETF for a shortterm return of 10-15 per cent, said analysts.“Since the March lows, PSU banks have seen consolidation at lower levels on high volumes, indicating accumulation,” said Ashish Chaturmohta, head – technical and derivatives, Sanctum Wealth Management. “Last week’s breakout was seen with strong momentum and now follow-through action is seen. Thus, an up move of 15-20 per cent can be seen from current levels.”“To ride the entire PSU banks rally, buy Nippon India ETF PSU Bank BeES cash at Rs 20.12 with a stop loss of Rs 17.50 for a target of Rs 24-25 in a month or two,” he added.Nippon India ETF PSU Bank BeES rallied 8 per cent to Rs 20.70 on Tuesday while Kotak PSU Bank ETF rose 7.22 per cent to Rs 183.79631564“Considering the current chart structure of PSU Banking index and its components, we are expecting continuation in ongoing momentum in coming days too,” said Chandan Taparia, analyst, Motilal Oswal Financial Services.Stocks such as Canara Bank, PNB, Bank of Baroda, Indian Bank and Punjab & Sind Bank have rallied between 40 per cent and 50 per cent in the last one month. But for IDBI and Indian Overseas Bank, all PSU banks are trading below their book values.Shares of Canara Bank which had launched a QIP to raise up to Rs 2,000 crore rallied over 16 per cent on the BSE. Bankers said the demand for the QIP has been overwhelming. PNB, too, is planning to raise Rs 7,000 crore through a QIP.

from Economic Times https://bit.ly/2JZs5br
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