PSU Banks: Time to Buy?

Hello viewers. Welcome to the Fast Profits Daily. Myself, Brijesh Bhatia.

Well if you look at the whole year, one sector which has been an underdog and stood out very, very strongly, is PSU Banks. If you look at the banking space, we haven't seen much coming from the Bank Nifty if you look at the last second half of the year. But if I look at the overall markets, they have been trending good.

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PSU Banks into the banking space has come out very, very strongly and after a huge consolidation, post its revival from the 2020 lows. The start of 2021 probably the first half it consolidated in a range.

 

If I just look at the weekly chart over here, on your screen is a weekly chart of the PSU Bank index. It broke out between July and August. Once it broke out, it went on to the higher levels, and it was largely led by SBI, BoB into the momentum and obviously they hold the highest weightage and that's the reason we have seen PSU Bank index is coming up very, very strongly.

But then, again it retested the breakout levels. Now, if I look at the lower line, the rising trend line from the lows, prices in the recent low when markets corrected from 18,600 back to 16,800, this has been holding very, very strong. Once the rising trendline holds, it creates a huge support.

Plus if I look at the two averages over here, this is the 34 exponential moving average, the green line, and the red line is 55 exponential average on a weekly scale. Even if you look at the historical move, I'm generally plot 34 and 55 because when they tend to give a positive momentum or the positive cross over, the trend continues, and 34 and 55 base acts as a huge support zone.

So now, even if look at the previous, when the negative crossover happened, it re-tested around 55 went down to the lower levels. Now it has given a positive cross over above 34 and 55. Testing the 34 with the trend line support indicates huge momentum and the breakout is still intact, and we might see a positive momentum.

 

If I just go on to the top down approach in the daily chart over here on your screen, it broke out of a cup and handle structure. If you look at the left semi-circle as the cup and the right semi-circle as the handle, it broke out and it retested the breakout levels.

Now, if you look at the RSI on the lower panel, it is said that when the trend is bullish, the 40 RSI is a huge buying opportunity. In this case, it tested around 36-37 which is around 40 levels, coming back very, very strongly, and now above 50 levels, indicates that there is a huge potential for PSU banks for trading per se.

I believe for the next 45 to 60 days, we might see the PSU Bank index momentum. Around 12-15% upside can be expected on PSU Bank index looking at the structure. If you look at the last week closing over here, it was again at the highest level and the candle also was very, very bullish, the bar.

So I believe PSU Banks from January till February end, you should definitely look at the PSU banks. The stock selection would be very tricky because we have seen SBI, we have seen BoB, and some of the few stocks outperforming, as against a few stocks underperforming. So I would suggest stick on to the stocks which are outperforming and stay on to the long side for trading per se on these stocks.

Signing off, Brijesh Bhatia.