Bank of Maharashtra, IOB: Privatisation buzz sparks rally; should you buy?

The overall trend is optimistic till the Nifty PSU index defends the support of 2,000 mark on the closing basis

 Shares of public sector banks (PSBs) were on fire on Tuesday after a report by news agency Reuters said the government has shortlisted Bank of Maharashtra, Bank of India, Indian Overseas Bank, and the Central Bank of India for privatisation in fiscal year 2021-22.

Individually, Bank of Maharashtra and Indian Overseas Bank hit 20 per cent upper circuit at Rs 19.05 and Rs 13.10, respectively while Central Bank of India surged 16.8 per cent intra-day at Rs 16.30, and Bank of India rose 14.95 per cent at Rs 67.65. READ MORE

"With the majority of asset quality stress recognised and many PSU Banks reasonably capitalised, it might be easier to attract investors. While these banks have lost share in lending, many of them have been able to grow retail deposits well, especially in the post-Covid era as they gained due to risk aversion," analysts at Jefferies said in a report.

Here's how these stocks look on technical charts:
 

NIFTY PSU BANK: The overall trend is optimistic till the index defends the support of 2,000 mark on a closing basis. While the Relative Strength Index (RSI) is trading in the overbought condition, the upward bias is expected to remain intact until the support value of 66 is not broken on the downside. A move above 2,400 level may result in a breakout towards 2,550 mark. CLICK HERE FOR THE CHART
 
Bank of Maharashtra (MAHABANK): Following the sharp gap-up start on February 16, the stock has given a breakout of "Inverse Head and Shoulder" pattern on the monthly chart. The overall structure is supported by strong volume action, suggesting that market participants are keenly taking interest in this stock. The trend is heading towards Rs 25 mark in the short-term and Rs 35 over the medium-term. The support stays at Rs 15 levels. CLICK HERE FOR THE CHART
 
Bank of India (BANKINDIA): The stock has managed to cross the resistance of Rs 60 levels. Now, with a decisive move above Rs 64, the stock is likely to head towards Rs 80 levels. The support comes at Rs 59 and Rs 54, as per the weekly chart which shows the momentum has been rising above Rs 55 mark. CLICK HERE FOR THE CHART
 
Central Bank of India (CENTRALBK): This stock has multiple resistances at higher levels. For instance, the immediate resistance comes at Rs 17, followed by another at Rs 20 and then at Rs 23 levels. That said, positive bias may remain intact in the stock as long as it holds the support of Rs 12. Volume-based buying shows the stock may see aggressive move ahead only if the nearby resistances are conquered with sharp up move. CLICK HERE FOR THE CHART
 
Indian Overseas Bank (IOB): The gap up trade on February 16 has lead to a breakout above the horizontal resistance of Rs 12.40 levels. This move is well supported by Moving Average Convergence Divergence (MACD), which is stable above the zero line with a positive crossover. Going forward, as long as the stock defends the support of Rs 11.50 on the closing basis, the upside bias may see a rally in the direction of Rs 16 mark. CLICK HERE FOR THE CHART