PSU Banking Sector Outlook after Quarterly Results
Indian banks in public sector have been facing selling pressure as investors are concerned about high levels of non-performing assets. State Bank of India and Bank of Baroda are two of the best performing banks in the sector. As SBI posted strong set of numbers with NPA under control, the stock touched 52-week high. However, as the broader market declined, SBI reduced to Rs 300 in the recent trading sessions.
Bank of Baroda is also trading near its 52-week low of Rs 90.70. As the bank has reported better quarterly numbers, investors with high-risk appetite can consider buying Bank of Baroda. As the government has planned to merge smaller banks into large PSU entities, there are a lot of changes that banking sector will witness in the coming quarters.
Among other public sector banks, PNB, Bank of India, IDIC Bank and Allahabad Bank aren’t the best options. Oriental Bank, Syndicate Bank, Central Bank and Union Bank have lost investor interest and the stocks of these banking counters are lagging far behind.
Canara Bank can be considered at lower levels for long term investment.
Investment in public sector banks might take a long time to offer returns. And, this will also depend on macroeconomic factors and their NPA levels. Majority of banks have cleaned up their balance sheets and going forward, we can expect public sector banks to report strong numbers. In case the economy remains strong, public sector banks can surprise with good returns.