SBI, PNB: Should you buy or sell PSU bank stocks post JSW Steel SC order?

Technical charts indicate a likely mixed outlook for state-run banking shares. Bank of Baroda and IOB stocks seem to be favourably placed, while PNB and Canara Bank may witness downward pressure.

Shares of state-run banks, mainly the likes of SBI, Punjab National Bank and Canara Bank, among others are likely to be in focus following the adverse Supreme Court ruling last Friday declaring JSW Steel's resolution plan for Bhushan Power and Steel (BPSL) “illegal” and ordering the company's liquidation.  State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB), Indian Bank, Canara Bank, and Indian Overseas Bank (IOB) were among the major lenders to Bhushan Power and Steel, when it was referred to the corporate insolvency resolution process, under the Insolvency and Bankruptcy Code (IBC), in 2017 by the Reserve Bank of India (RBI).  According to a Business Standard report, these banks will have to make provisions for the amounts recovered because the funds have to be returned. The setback to state-owned banks comes at a time when their margins are under pressure. READ MORE  On the stock exchanges on Monday, SBI was down nearly 2 per cent, as apart from the JSW Steel-BPSL news flow, the stock also reacted to its Q4 results announced over the weekend. IOB and BoB were marginally in red, while PNB and Canara Bank traded on a flat note.   

Against this background, here's a technical outlook on these 5 state-run lenders shares. 

SBI

  Current Price: ₹ 788  Upside Potential: 4.6%  Downside Risk: 11.2%  Support: ₹ 755  Resistance: ₹ 824  Amid the recent rally from lows of ₹ 680 on April 7 to a high of ₹ 835, SBI stock failed to conquer its key medium-term resistance on a weekly closing basis at ₹ 824. Thus, the near-term bias is likely to remain tepid as long as the stock trades below the same.  On the downside, the stock has a key support at ₹ 755; below which the stock may dip to ₹ 720 - ₹ 700 levels. In the medium-term, SBI may consolidate in the ₹ 700 - ₹ 824 range, until we witness a breakout in either direction, suggests the weekly chart. CLICK HERE FOR THE CHART 

Bank of Baroda

  Current Price: ₹ 249  Upside Potential: 16.5%  Support: ₹ 243; ₹ 236  Resistance: ₹ 258; ₹ 267; ₹ 282  Bank of Baroda stock is seen trading with a positive bias. The near-term trend is likely to remain favourable as long as the stock holds above ₹ 243; below which significant support for the stock exists at ₹ 236 levels. On the upside, the stock can potentially rally to ₹ 290 levels, with interim resistance likely at ₹ 258, ₹ 267 and ₹ 282 levels. CLICK HERE FOR THE CHART 

Canara Bank

  Current Price: ₹ 97.10  Downside Risk: 5.8%  Support: ₹ 93.70  Resistance: ₹ 102; ₹ 105.50  Canara Bank shares has retraced after testing resistance at its 50-Weekly Moving Average (50-WMA) around ₹ 102 levels. The weekly chart suggests that the near-term bias is likely to remain tepid as long as the stock remains below ₹ 102 - ₹ 105.50 resistance zone. On the downside, the stock has near support at ₹ 93.70; below which it can potentially dip to ₹ 91.50 levels. CLICK HERE FOR THE CHART 

Punjab National Bank (PNB)

  Current Price: ₹ 99.90  Downside Risk: 12.9%  Support: ₹ 98; ₹ 96; ₹ 90  Resistance: ₹ 103.70; ₹ 106.50  PNB stock is seen trading below its long-term 200-Monthly Moving Average (20-MMA), which stands at ₹ 106.50, for the eight straight month. The overall bias at the counter is expected to remain negative as long as the stock remains below the same, with near resistance likely at ₹ 103.70.  On the other hand, the stock seems to have built a notable base around ₹ 87 levels. Near support for the stock exists at ₹ 98, ₹ 96 and ₹ 90 levels. CLICK HERE FOR THE CHART 

Indian Overseas Bank (IOB)

  Current Price: ₹ 37.60  Upside Potential: 17%  Support: ₹ 35.50; ₹ 34.20  Resistance: ₹ 40.90  IOB stock for the second straight month is seen trading close to its key long-term support, which stands at ₹ 34.20 - in the form of the monthly super trend line. The stock has been trading above this indicator since February 2021. That apart, the stock is also seen testing support at its 200-Weekly Moving Average (200-WMA) at ₹ 35.50. CLICK HERE FOR THE CHART  Given the significance of these 2 key support levels, the near-term downside for the stock seems limited. On the upside, the stock needs to break and trade consistently above ₹ 40.90 to trigger a fresh 'Buy' signal. Post which, the stock can potentially zoom to ₹ 44 levels.