Flying high! SBI, BoB, Canara Bank poised for up to 18% rally, charts show

The Nifty PSU Bank index hit a fresh 52-week high on Friday and has gained 15 per cent so far this month. The index can rally another 4 per cent.

On Friday, the PSU bank index kicked-off the trading session by hitting a fresh 52-week high at 3,502, thus gainng as much as 15 per cent so far this month.

The PSU Banking shares are likely to remain in focus, with an additional Monetary Policy Committee (MPC) meet planned on November 3 (Thursday) followed by the scheduled review meet in December. 

The Reserve Bank of India (RBI) on Thursday announced an additional MPC meet to discuss its response to the government for failing to achieve its inflation mandate. According to the Monetary Policy Framework under the RBI Act, if the central bank fails to meet the inflation target for three successive quarters, it is answerable to the government, and must suggest likely remedial measures and time-frame. READ MORE

So far since May 2022, the Central Bank has raised interest rates by up to 190 bps (basis point) to tame the soaring inflation, this includes the 50 bps hike announced on September 30. The next scheduled RBI meet is in December 2022.

Given the news of additional MPC meet next week, the Street is sensing some sort of anxiety, as the overall sentiment has been uncertain in recent times owing to monetary tightening by global bankers. Should you be worried, or is there more steam left in PSU banking shares?

In such scenario, investors with high risk appetite can look to benefit from the current momentum in PSU Bank stocks, whereas risk-averse players could stay on the side lines.. 

Here's a technical outlook on select PSU banking shares: 

NIFTY PSU BANKS (NIFTYPSUBA)

Likely target: 3,600

Upside potential: 4%

The PSU bank index has smartly recovered from the sell-off that led it to register fresh lows in June 2022. An “Inverse Head and Shoulder” formation breaking out over the 200-day moving average (DMA) has pushed the index into a bullish grip. The 200-DMA is set at 2,789 level. 

As per the present scenario the daily chart indicates that, a move over the 3,268 mark, its previous hurdle, can trigger fresh upside in the direction of 3,600. CLICK HERE FOR THE CHART

State Bank of India (SBIN) 

Likely target: Rs 625

Upside potential:  10%

When viewed from a broader perspective, the stock seems to have absorbed all the selling pressure predominated in the range of Rs 560 to Rs 530 level on the monthly chart. The stock struggled to surpass this range since past one year. 

The medium-term outlook points to an upside towards Rs 625, with initial cushion at Rs 560 and thereafter at Rs 540 levels. CLICK HERE FOR THE CHART

Canara Bank (CANBK)

Likely target: Rs 334

Upside potential: 15%

Soon after the Canara Bank stock surpassed its 2016 barrier of Rs 293, there has been a strong build-up of a bullish sentiment at the counter. The weekly chart texture suggests a six-year breakout supported by robust volumes eyeing medium-term upside. The stock seems headed towards Rs 334, representing a 15 per cent gain. The stock’s support level is placed at Rs 275. CLICK HERE FOR THE CHART

Bank of Baroda (BANKBARODA)

Likely target: Rs 175

Upside potential: 18%

Shares of Bank of Baroda recorded a new 52-week high conquering the resistance of Rs 144. This move has resumed the “Higher High, Higher Low” formation emerged since May 2022, shows the weekly chart. Thus, as long as the stock upholds the cushion at Rs 130, the optimistic trend suggests an upside target of Rs 175. CLICK HERE FOR THE CHART

Indian Bank (INDIANB)

Likely target: Rs 265

Upside potential: 10%

Indian Bank extended its winning streak to the ninth session on Friday, gaining as much as 25 per cent. The breakout over Rs 210 triggered fresh upside in the stock, shows the daily chart. The momentum is resilient, with stock price expected to jump further to Rs 265. The immediate support for the stock is visible at Rs 230 level. CLICK HERE FOR THE CHART