NARCL boost: Select PSU Banks can rally up to 25%; SBI may hit Rs 500-level

The Finance Minister in Budget 2021-22 announced that the high level of provisioning by public sector banks of their stressed assets calls for measures to clean up the bank books

The PSU banking shares have been in limelight in trade on Friday, after the government made efforts help resolve NPAs (Non Performing Assets) by way of setting-up a 'bad bank'. The Finance Minister Nirmala Sitharaman on Thursday said the National Asset Reconstruction Company Ltd (NARCL) would be operational soon, and will acquire stressed assets of about Rs 2 trillion in phases. 

"The idea is to ensure resolving bad loans within five years, beyond which the guarantee to be issued by the government would expire," she added. READ MORE

While banks work on the business part of the process, here's how PSU bank shares can play out at the bourses going ahead, based on their respective chart patterns.

NIFTY PSU BANK
Likely target: 2,660
Upside potential: 3%

While the index fell short by one point to conquer the resistance of “Head and Shoulder” placed at 2,581 level, the momentum and direction seems confident in conquering the said mark in up-coming trading sessions. And when that happens, the breakout rally can lead the index to 2,660-level, which is its next obstacle, according to the daily chart. The closing basis support stays at 2,470. CLICK HERE FOR THE CHART
 
 
State Bank of India (SBIN)
Likely target: Rs 500
Upside potential:  7%

The current rally has crossed the previous resistance of Rs 467.45 indicating more upside in the coming sessions.  As long as the support of Rs 440 is held decisively, the medium term outlook as per the daily charts represents an upside towards Rs 500-mark. The Moving Average Convergence Divergence (MACD) has crossed the zero line upwards suggesting a positive direction with momentum very strong.  CLICK HERE FOR THE CHART

 
Central Bank of India (CENTRALBK)
Likely target: Rs 26 and Rs 28
Upside potential: 10% to 20%

The shares of Central Bank of India have aggressively closed above the 100-day moving average (DMA) and 50-DMA placed at Rs 22.50 and Rs 21.50, respectively, suggesting a breakout towards Rs 26 and Rs 28-mark. The long term support stays at Rs 18.60, which is its 200-DMA. The immediate support falls at Rs 21.50 level. The MACD is on the verge to cross the zero line and if that happens, the upward momentum is expected to shows firm rally, as per the daily chart.  CLICK HERE FOR THE CHART

 
Punjab National Bank (PNB)
Likely target: Rs 48 and Rs 52
Upside potential: 17% to 25%

The stock is set close above its 100-weekly moving average (WMA) placed at Rs 40.20 almost after 2 years and if that happens, the upside breakout may see a medium-term bullish outlook that can rise nearly 50 per cent  towards Rs 65, which is its 200-WMA. The immediate upside seems in the direction of Rs 48 and Rs 52-level. The stock has strong support at Rs 36,70, its 50-WMA. CLICK HERE FOR THE CHART
 
Indian Bank (INDIANB)
Likely target: Rs 155 (after crossing Rs 145)

Upside potential: 6%

To breakout on the upside, the Indian Bank needs to aggressively close above the resistance of Rs 145. When it does, the positive sentiment may immediately see a rally towards Rs 155-mark. The current support remains at Rs 135 and Rs 131 levels.  The medium term support stays at Rs 119, which is its 200-DMA. The recent rally is supported by volume suggesting the interest of market participants in favour of upside. CLICK HERE FOR THE CHART