SBI, Equitas SFB: How to trade bank stocks post latest RBI announcements

The RBI has announced a few steps to encourage small finance banks (SFBs) to increase the credit flow to small borrowers

Financial sector stocks gained ground at the bourses on Wednesday after Reserve Bank of India (RBI) Governor Shaktikanta Das made an unscheduled announcement in which debt restructuring was allowed for individual and small borrowers who had not availed a similar scheme announced last year when the Covid-19 pandemic first broke out

Besides, the RBI also announced a few steps to encourage small finance banks (SFBs) to increase the credit flow to small borrowers. It announced a special long-term repo operation window for SFBs, whereby the banks can borrow funds up to Rs 10,000 crore at repo rate for deploying for fresh loans SFBs, to be deployed for fresh lending of up to Rs 10 lakh per borrower. READ MORE

Consequently, shares of SFBs like Equitas SFB, Ujjivan SFB, AU SFB and Suryoday SFB rose up to 6 per cent from their respective intra-day day lows on the BSE. Ujjivan SFB gained 6 per cent to Rs 30.40, while, AU SFB was up 5 per cent to Rs 58.80, followed by Equitas SFB (up 4 per cent at Rs 58.80) and Suryoday SFB (1 per cent at Rs 248.80) on the BSE in intra-day trade today.
 

Here's how some bank stocks and the Nifty Bank index look on charts
 

NIFTYBANK

Likely target: 33,810      

Upside potential: 3.70%

This index has a resistance of 100-day moving average (DMA) and 50-DMA, currently placed at 33,087 and 33,810, respectively. The overall trend is bullish till the index defends the closing basis support of 32,000 levels. The Moving Average Convergence Divergence (MACD) is rising upward, and making attempts to cross the zero line; which indicates a positive bias for the current trend, as per the daily chart. CLICK HERE FOR THE CHART
 
State Bank of India (SBIN)

Likely target: Rs 370

Upside potential: 4.82%

This index has a strong resistance of Rs 370 levels, as per the daily chart. Although, it has given a trendline breakout, the upside bias needs to cross this significant hurdle. On the downside, until the counter defends the closing basis support of Rs 340, the positive bias should see an upside rally, as per the daily chart. CLICK HERE FOR THE CHART

Canara Bank (CANBK)

Likely target: Rs 157 - Rs 164 (after crossing Rs 145 decisively)

Upside potential:  6% - 11%

The counter is making efforts to conquer the horizontal resistance of Rs 145 levels decisively. When that happens, an upside rally towards the next resistance of Rs 157 and Rs 164 cannot be neglected, as per the daily chart. The Relative Strength Index (RSI) is trading with a positive crossover, suggesting a firm upward strength. The support comes at Rs 135 mark. CLICK HERE FOR THE CHART
 
Ujjivan Financial Services Limited (UJJIVAN)

Likely target: Rs 221 and Rs 240 (after conquering Rs 210)

Upside potential: 5.24% - 14.29%

The counter has formed a “Death Cross”, resulting in a negative sentiment. To show a firm upside, it needs to conquer the resistance of Rs 210 decisively. When that happens, the rally may see a swing towards Rs 221 and Rs 240, which are its 50-DMA and 100-DMA, respectively. The immediate support comes at Rs 195 mark. CLICK HERE FOR THE CHART
 
Equitas Small Finance Bank Ltd (EQUITASBNK)

Likely target: Rs 63

Upside potential: 10%

With an up move above 50-DMA, along with the support of MACD -- which is attempting to cross the zero line, this counter is set to rise towards Rs 63, which is its next resistance mark. Going forward, until the counter does close below the support of Rs 53 levels, the upside bias is here to stay. CLICK HERE FOR THE CHART
 
Bajaj Finance Ltd (BAJFINANACE)

Outlook: Breakout above Rs 5,800 mark

The next upside breakout for Bajaj Finance is above a strong rally of Rs 5,800 levels, which is currently acting as a hurdle, as per the daily chart. The support comes at 50-DMA, placed at Rs 5,209 mark. The overall trend is indicating a bullish outlook, but one needs to wait for a confirmed breakout, as displayed on the charts. The MACD has crossed the zero line, as indication of a positive momentum. CLICK HERE FOR THE CHART
 
AU Small Finance Bank Limited (AUBANK)

Likely target: Rs 1,040 levels

Upside potential: 11%

The counter is trading mildly above the 200-DMA, placed at Rs 894.60 levels. Until this support is held, the counter may see an upside towards Rs 1,040 levels, which is its 100-DMA. The current trend is sideways with increased volumes, indicating a major move in coming sessions. CLICK HERE FOR THE CHART