Buy, sell, hold? Trading strategy in PSU bank stocks amid stake sale buzz?

Technical charts flag up to 22% downside risk for PSU bank shares such as Indian Overseas Bank, Uco Bank, Central Bank of India and Punjab & Sind Bank as government stake sale buzz looms.

Shares of state-run public sector banks (PSU) have been in limelight lately, with the Nifty PSU Bank index up nearly 1.5 per cent in early days this October. The Nifty PSU Bank index had surged 11.4 per cent in September, and has rallied over 33 per cent since the end of February 2025.  Among PSU bank stocks - Canara Bank, Indian Bank, Bank Of India, Punjab National Bank, Bank Of Baroda and Union Bank Of India surged in the range of 11 - 19 per cent last month; whereas Central Bank Of India, Uco Bank, Bank Of Maharashtra, Punjab & Sind Bank and Indian Overseas Bank - which are potential divestment candidates - were up in the range of 4 - 9 per cent each. India's largest state-run bank - the State Bank of India (SBI) stock advanced around 9 per cent.  The government is likely to sell stake in select PSU Bank stocks in order to comply with market regulator Securities Exchange Board of India (Sebi) mandate on minimum public shareholding.  As per media reports dated August, the government appointed Goldman Sachs as the sole transaction adviser for the stake sale in first PSU banks - Central Bank Of India, Uco Bank, Punjab & Sind Bank, Indian Overseas Bank; while some reports also named Bank of Maharashtra.  ALSO READ | SkyGold, Voltamp among 5 stocks promoters sold stake in Sept; how to trade? 

5 PSU Bank stocks to watch out for

  Interestingly, barring Bank of Maharashtra - the other 4 PSU bank shares have under-performed and declined up to 26 per cent in the last seven months (since February end).  Given the background of a likely stake sale, here's a trading strategy in these 5 PSU bank shares. 

Indian Overseas Bank (IOB)

Current Price: ₹39.86  Likely Target: ₹43 / ₹34.15  Upside Potential: 7.9%  Downside Risk: 14.3%  Support: ₹38.65; ₹37.30  Resistance: ₹41.75  IOB stock is seen languishing below the 200-Day Moving Average (200-DMA) since the breakdown in September 2024. The daily chart suggests that the trend is likely to remain tepid as long as the stock trades below ₹41.75 levels; above which another stiff resistance exists at ₹43 levels.   

 

 

  On the downside, the stock has near support at ₹38.65 and ₹37.30 levels; below which a test of ₹34.15 seems likely.  ALSO READ | Sky Gold, Voltamp among 5 stocks promoters sold stake in Sept; how to trade? 

Punjab & Sind Bank (PSB)

Current Price: ₹29.87  Likely Target: ₹35.40 / ₹26.50  Upside Potential: 18.5%  Downside Risk: 11.3%  Support: ₹30.34; ₹33.80  Resistance: ₹28; ₹27.50  PSB share price is seen struggling around its 100-DMA, which stands at ₹30.34; above which key weekly resistance for the stock stands at ₹33.80 followed by the 200-DMA around ₹35.40 levels. On the downside, the stock has been finding consistent support around ₹26.50 and ₹27.50 levels since the last six months. Hence, the stock may remain sideways in the near-term with near support visible at ₹28.   

 

 

Uco Bank

Current Price: ₹31.14  Likely Target: ₹33.90 / ₹24.25  Upside Potential: 8.9%  Downside Risk: 22.1%  Support: ₹29; ₹27.25  Resistance: ₹33  Uco Bank stock is seen trading above the short-term moving averages, and seems to be on course to test the 200-DMA, which stands around ₹33.90; with interim resistance likely around ₹33 levels.   

 

  On the downside, key support for Uco Bank stands at ₹29. Break and sustained trade below the same can trigger a fall towards ₹24.25 levels, warn the long-term chart. Intermediate support for the stock can be anticipated around ₹27.25 levels.  ALSO READ | Bank of Baroda rallies 3%, hits 52-week high on strong Q2 business update 

Central Bank of India

Current Price: ₹37.71  Likely Target: ₹41 / ₹30  Upside Potential: 8.7%  Downside Risk: 20.5%  Support: ₹35.72; ₹34.40  Resistance: ₹38.70; ₹39.70  The upside for Central Bank of India (CBI) stock seems capped around ₹39.70 - ₹41 levels, with near resistance visible around ₹38.70. On the downside, support for the stock is visible at ₹35.72 and ₹34.40 levels; below which the stock can crack to near ₹30 levels.   

 

 

Bank of Maharashtra (Maha Bank)

Current Price: ₹57.09  Likely Target: ₹65.50  Upside Potential: 14.7%  Support: ₹55.50; ₹53.76  Resistance: ₹58.25; ₹61.50; ₹62.50  Maha Bank stock is seen trading with a favourable bias, with near-term trend likely to be positive as long as the stock holds above ₹53.76; with interim support likely around ₹55.50 levels. On the upside, the stock needs to break and trade consistently above ₹58.25 levels to gain momentum. The stock can potentially rally to ₹65.50 levels, with interim resistance likely around ₹61.50 and ₹62.50 levels.