PSU Bank index rose the most in 2022. Will this trend continue in 2023?

PSU Bank index surged 71 per cent in CY22, recording the highest-ever gain since it debut in 2011

Public Sector undertakings (PSU) Bank index was the best performer among key indices for the calendar year 2022 (CY22), with its highest-ever gains of 70.66 per cent, despite the overall stock market witnessing a bumpy road. 

In CY22, the benchmark indices, the BSE Sensex and Nifty 50 surged 4.44 per cent and 4.33 per cent, respectively, while Nifty Bank index gained 22 per cent. The Nifty PVT (private) Bank index added 21.15 per cent in the same year.

While the PSU Bank index narrowly missed recording a new historic peak in 2022 by 23 points. It's all-time high is at 4,639.90, which was hit in its debut year of 2011. The index gained the second most in 2014 by rising 67 per cent. 

Its constituents, such as Bank of Baroda, Indian Bank, UCO Bank, and Punjab and Sind Bank registered double-digit gains in CY22. All other PSU Banks advanced more than 50 per cent, with the exception of State Bank of India, which added 35.30 per cent.

The outperformance of the PSU Bank index emerged in the latter half of the CY22. From July 2022 to December 2022, the index rose almost 77 per cent, after staying laggard in the first half of the year. The index had slipped to a 52-week low of 2283.85 in June 2022.

On Monday, barring, Punjab and Sind Bank, all other PSU Banks began the New Year on a positive note. The top gainers in the morning deals were Bank of India, Union Bank of India and Punjab National Bank, which surged 3 per cent, 1.75 per cent and 1.60 per cent each.

Now, the question among the market participants is: Will the PSU Bank index continues to perform well in CY23? To help you understand the next course of the PSU Bank index and its stocks, here’s the technical outlook:-

NIFTY PSU BANK (NIFTYPSUBA)

Likely target: 4,650

Upside potential: 6%

Since October last year, the trend in the PSU Bank index has trending vertically, with a relentless move absorbing all the selling pressure along the way. While the index did see corrective action in the latter half of December last year, the underlying trend has remained optimistic and technically, a move to hit fresh historic peaks is expected in the coming sessions. The index is headed to 4,650, with a support of 4,220-mark.CLICK HERE FOR THE CHART

State Bank of India (SBIN) 

Likely target: Rs 700

Upside potential: 11%

While the shares of State Bank of India continue to witness selling pressure in the range of Rs 630 to Rs 620 levels, the expanding bullish trend over the breakout of Rs 550 emerged in the September last year has seen buying accumulation on the every healthy correction. The immediate support exists at Rs 570, which needs to be monitored on the closing basis and the robust move above the hurdle range could result in a rally towards Rs 700 levels. CLICK HERE FOR THE CHART

Indian Bank (INDIANB)

Likely target: Rs 350 (After a move over Rs 300)

Upside potential: 16%

Shares of Indian Bank are struggling to surpass the hurdle of Rs 300-mark decisively. When it overcomes this obstacle, the breakout shall realise a sharp up move in the direction of Rs 350, as per the daily chart. The immediate cushion stays at Rs 271, which is its 50-day moving average (DMA). Only a dip beneath Rs 260 could hamper the upside bias.  CLICK HERE FOR THE CHART

UCO Bank (UCOBANK)

Likely target: Rs 40

Upside potential: 14%

The current chart formation of the UCO Bank shares reflects a “Higher High, Higher Low” pattern, which now has a closing basis support of Rs 30 level. On the higher side, the stock must take out the resistance of Rs 35, to embark on a new bullish trend that may record a new historic high of Rs 40 level.  CLICK HERE FOR THE CHART

Punjab and Sind Bank (PSB)

Likely target: Rs 40

Upside potential: 20%

Punjab and Sind Bank shares are in process of forming a “Golden Cross” of 200-weekly moving average (WMA), with 100-WMA and 50-WMA and if this happens, the medium-term outlook for the stock would shift totally in the bullish terrain. The trend could initially rally in the direction of Rs 40 and thereafter may attempt to register new all-time highs.  CLICK HERE FOR THE CHART