After opening lower in the morning session on Thursday, the Indian stock market rebounded strongly, fueled by intensified buying in the public sector unit (PSU) segment. State Bank of India (SBI) emerged as a prominent beneficiary of this buying interest, with its share price opening downside at 770.65 apiece on the National Stock Exchange (NSE). However, SBI quickly bounced back, reaching an intraday high of 806 per share, setting a new lifetime high for the company.
Market experts believe that SBI’s share price surge is driven by the overall positive sentiment towards PSU stocks, following the initial downturn at the market open. They also cite the Reserve Bank of India’s (RBI) new guidelines on Kotak Mahindra Bank as a contributing factor. These guidelines are expected to benefit large banking players like SBI, Axis Bank, ICICI Bank, and others, as Kotak Mahindra Bank’s credit card business is likely to face challenges.
Avinash Gorakshkar, Head of Research at Profitmart Securities, highlights the reasons behind SBI’s share price rise: “SBI shares are rising because investors are seeking undervalued PSU stocks. As the Indian banking major is expected to gain from post-Lok Sabha election infrastructure projects, the market anticipates solid quarterly numbers from the PSU bank. They expect the banking major to deliver strong Q4 results in 2024 due to the high-interest rate regime.”
Gorakshkar also acknowledges the potential impact of the RBI’s recent ruling on Kotak Mahindra Bank, which is expected to boost the credit card business of competitors, including SBI. SBI’s credit card business is likely to see gains in tier-2 cities, while private banks such as Axis Bank and ICICI Bank are expected to benefit in metropolitan areas.
Sumeet Bagadia, Executive Director at Choice Broking, shares his outlook for SBI’s share price: “SBI share price today achieved a fresh breakout at 800 apiece on chart patterns after surpassing its resistance level of 780 per share. We advise current SBI shareholders to hold the scrip with a revised stop loss from 735 to 780 for a short-term target of 850 per share.” Bagadia suggests a “buy-on-dips strategy on every major dip” for new investors, provided the scrip remains above 780 apiece, anticipating a potential rise to 850 per share.
