New Delhi: After two significant trades on Monday, shares of Indian Overseas Bank Ltd. rose to an eight-year high. Bloomberg data shows that at least 12 lakh shares, or 0.01% of the stock, were traded in a significant transaction at Rs 45.50 a share. At Rs 45.65 a share, another 11 lakh shares, or 0.01% of the equity, were traded.
Shares of the bank rose as much as 18.99%, the most elevated level since April 2015, sometime recently paring gains to exchange 16.46% higher at 11:15 am. This compares to a 0.08% decline within the NSE Clever 50. The stock has picked up 45.48% on a year-to-date premise. The total traded volume so distant in the day stood at 6.6 times its 30-day normal. The relative quality record was at 84.29, suggesting that the stock may be overbought.
Shares of public sector undertaking (PSU) banks were on a roll, with Indian Overseas Bank (IOB), Central Bank of India, Punjab & Sind Bank (PSB) and Uco Bank soaring up to 19 per cent on the back of heavy volumes, in an otherwise subdued market. In the past four trading days, the stock prices of these banks have zoomed between 30 per cent and 45 per cent.
The one analyst following the company recommends a ‘sell’ on the stock, according to Bloomberg information. Shares of PSU managing account companies were exchanging higher on Monday, as the NSE Nifty PSU Bank rose 3.26% as of 11:05 am, compared to a 0.07% decline within the NSE Nifty 50. All 12 constituents compiled by the file progressed, with Indian Overseas Bank Ltd, UCO Bank Ltd, and Punjab & Sind Bank Ltd rising the foremost in exchange.
Strong credit growth, relatively low valuations and commendable results in terms of asset quality contributed to the increase in the banking index.
At 2:30 pm, Nifty PSU Bank was up 4%, led by
Indian Overseas Bank with a 20% gain. Punjab & Sind Bank, UCO Bank and Central Bank of India also grew with increases ranging from 13 to 16%.
Axis Securities highlighted in a recent note
that credit growth of scheduled commercial banks (SCBs) grew 15% in March 2023, compared to 8.6% a year ago. The faster pace of credit withdrawal is believed to be due to pent-up demand as the normalization of economic activity accelerates.
Among individual banks, IOB hit an over eight-year high of Rs 47 on an 18% increase on more than two-fold increase in trading volumes. In the past four trading days, it is up 45%. Share prices are at their highest since April 2015. A total of 235 million shares of the bank changed hands on NSE and BSE, of which 12:36 p.m.
“RBI’s December 2022 Financial Stability Report highlights that Indian banks are well capitalized and are in a well-equipped position to absorb any macroeconomic shock. In the base case, SCB’s GNPA ratio is expected to improve to 4.9% in September 2023 from 5% in September 2022. Even the inflation rate, which has increased significantly from December 2021, also eased in Q2 FY23. PSBs recorded the highest improvement during this period,” the brokerage said.
