Can PSU banks offer good returns even after a stellar rally?

The momentum in the PSU banking space remained strong even as the benchmark indices languished near the flatline. The Nifty PSU Bank index jumped 2.50 percent in the intra-day trade, with most stocks up in the range of 1-6 percent as against a 0.25 percent gain in the Nifty50.

Whether PSU Bank stocks can continue to draw investor interest is the question.

NIFTY PSU BANK needs to cross the resistance of 2,250 to break out on the upside.

After a decent reversal in the month of May 2021, the index is currently witnessing a hurdle near 2,550 levels. The Relative Strength Index (RSI) is in the overbought territory around this hurdle, suggesting selling pressure. Going forward, till the index doesn't conquer this resistance mark, the upside bias will remain capped. However, the downside support range falls at 2,250- 2,300 and till it defends this range, any major weakness is immaterial, as per the daily chart.

Union Bank

Likely target: Rs 44 and Rs 47

Upside potential: 15% and 20%

The stock is indicating a sideways or consolidation breakout above Rs 39 levels. The up move is heading towards Rs 44 and Rs 47 levels from a medium-term perspective. On the downside, the closing basis support of Rs 36 and Rs 38 stay firm and the current momentum shows retesting of these levels.

UCO Bank

Likely target: Rs 16 and Rs 18

Upside potential: 17% and 24%

The current scenario hints at mild profit booking around Rs 15 levels, the upside bias is firm with the support at Rs 13 and may reverse towards Rs 16 and Rs 18 levels. The 50-day moving average (DMA) is in the process of making a Golden Cross with 200-DMA. If that happens, the positive sentiment may result in a firm upward trend.

State Bank of India

Likely target: Rs 440 and Rs 447

Upside potential: 3.50% and 5%

If the stock is able to conquer the trendline resistance of Rs 425, the breakout may see a rally towards Rs 440 and Rs 447 mark. On the downside, it has support at Rs 410, which needs to be held on the closing basis, as per the daily chart. If the stock fails to conquer the Rs 425 mark, some weakness is likely near the support of Rs 410 levels.

Bank of Baroda

Likely target: Rs 90 and Rs 94 (A decisive breakout above Rs 85 )

Upside potential: 5% and 10%

Although the current momentum shows weakness around Rs 85 levels, the underneath price action is in the favor of upward bias. In the last 15 sessions, the stock has gone sideways and continues to maintain support levels firmly. Now, until a decisive breach below Rs 78 does not emerge, the upside bias is anticipated to observe a bullish sentiment, suggests daily chart. A breakout above Rs 85 may see the stock trend higher towards Rs 90 and Rs 94 levels.