Here’s why PSU Bank shares are rallying today

The shares of Union Bank were up by 7% at ₹71.55, Punjab and Sindh Bank’s stock were trading 6.81% higher at ₹28.25 on NSE on Friday’s intra-day trade. UCO Bank was up by 6.36% at ₹27.60 and Indian Bank shares were up by 5.70% at ₹290.15. Nifty PSU continued to perform well after dipping one month low on February 24.

The stock market is witnessing a sharp rebound that has been led by Banking sector stocks, says experts. Amid global market recovery and relief in Adani case, investors are experiencing some level of optimism in stock markets.

Adani group shares performed well on Friday after it received its first major investment of $1.87 bn from GQG Partners Inc post Hindenburg report release. The Florida-based firm bought 3.4% stake in Adani Enterprises Ltd for about $662 million, 4.1% of Adani Ports and Special Economic Zone Ltd for $640 million, 2.5% of Adani Transmission Ltd for $230 million, and 3.5% of Adani Green Energy Ltd for $340 million, reported Reuters.

Also read: Does the latest rally in Adani stocks mean the worst is over? Group’s m-cap shy of ₹8 lakh cr

Adani Enterprises Ltd was trading 13.89% higher at ₹1829.90 on BSE on Friday’s intra-day trade. Whereas, Adani Ports and Special Economic Zone shares were trading 8.87% higher at ₹678.50, Adani Transmission Ltd were up by 5% at ₹743.75, and Adani Greens Energy Ltd were up by 5% at ₹562.

Parth Nayati, Founder at Tradingo, believes that the relief over the Adani case has altered the market’s mood and led to a significant short-covering move.

Also Read: Adani denies report of securing $3 billion from sovereign wealth fund

“The India VIX was close to a multi-month low, therefore, despite the market’s extremely oversold condition, there was no panic. There are indications that the market has established a base and is prepared to rise, but US bond yield signals will be crucial. Technically, a 20-DMA of 17700 will be a key hurdle for the Nifty; above this, we can expect any meaningful strength in the market,” said Parth.

He believes that the PSU banking sector and all PSU stocks are considered strong due their fundamental strength.

“PSU banks will continue to do well since they are fundamentally in a much healthier stage and the prognosis is still positive. In terms of the Nifty PSE index, it is poised for a multiyear breakout, and if it occurs, we can anticipate a significant outperformance in the PSU sector over the course of the next few months,” he added.