A day before the announcement of Lok Sabha Elections result, the Stock Market has responded with nearly 3% spike on Monday.
The key reason behind the jump has been the Exit Polls prediction with showed a landslide victory for the BJP-led NDA coalition.
India’s largest Public Sector Bank, State Bank of India (SBI) surpasses the Rs 8 lakh crore market capitalisation, and emerged as the seventh Indian listed company to do so.
Not only the SBI, but the Bank of Baroda, PNB, Axis Bank, ICICI Bank, Kotak Bank, among others soared up to 12% on Monday.
Nifty Bank surged 4.07% while the Financial Services index and the Private Bank index jumped 4.04% and 3.34%, respectively. The Nifty PSU Bank index surged 8.40%.
Notably, several banking majors such as BoB, SBI, Axis Bank, ICICI Bank, Indian Bank, and Canara Bank hit fresh 52-week highs.
So far this year, these stocks have surged in the range of 10-46%, as against 5% climb in the Bank Nifty index.
Experts overweight on Banking and Finacial stocks
Jefferies remained positive on private financials such as HDFC Bank, IndusInd Bank, and Kotak Mahindra Bank, citing inexpensive valuations.
Morgan Stanley has also maintianed positive stance on these stocks saying, “We remain overweight on financials such as SBI, BoB, ICICI Bank, LIC Housing Finance, Shriram Finance, HDFC AMC, ICICI Prudential, ICICI Lombard.”
Neeraj Sharma, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd. said, “The Bank Nifty index opened with a big gap up and registered an all-time high of 51,133.20, finally settling the day on a positive note at 50,980. The Bank Nifty produced a hanging man candlestick pattern on top, which awaits further confirmation. The index has broken over the 49,975 barrier and continues climbing to new highs.”
“As long as the Bank nifty remains above its breakthrough level, the bull runs might extend to 52,000-52,700. On the downside, trend line support is nearing 50600 levels, with the recent breakout point at 49,975,” he added.
Bank stocks and the Modi effect
It is to be highlighted that last week, CLSA identified SBI, Canara Bank, and Bank of Baroda in its list of 54 Modi stocks.
Modi stocks are categorised as those that have benefited directly from government policies and initiatives under Prime Minister Narendra Modi.
From June 2019 to May 2024, i.e., the second duration of Narendra Modi as the Prime Minister, 10 out of 12 PSU bank stocks delivered multibagger.
Ace Equity highlighted that the Indian Overseas Bank was the top performer among PSU banks, delivering 473% returns in this tenure.
Bank of Maharashtra (325%) and UCO Bank (226%) where the other PSU banks who gave high returns in the period between June 2019 to May 2024.
Further, the Central Bank of India, State Bank of India (SBI), Indian Bank, Canara Bank, Punjab & Sind Bank, Union Bank of India, and Bank of Baroda provided returns ranging from 106% to 150%.
