Choice Broking view on Nifty PSU BankThe Nifty PSU Bank index was the worst performer in intra-day deals on Monday amid a broad-based sell-off across state-run banking shares.
The Nifty PSU Bank index crashed 2.25 per cent to a low of 8,108 around 10:40 AM.In comparison, the NSE Nifty 50 index slipped 1.34 per cent to 22,833.
The Nifty Bank shed 1.73 per cent, and the Nifty Private Bank index dropped 1.55 per cent.Among individual stocks, Bank of India and Bank of Maharashtra plunged 4 per cent each.
Union Bank of India, Canara Bank, Punjab National Bank and Bank of Baroda declined 2-3 per cent.
"The Nifty PSU Bank Index has broken its major rising trendline support on the daily chart and is now trading below key EMAs.
Why are PSU Bank stocks falling?
Choice Broking view on Nifty PSU Bank
The Nifty PSU Bank index was the worst performer in intra-day deals on Monday amid a broad-based sell-off across state-run banking shares. The Nifty PSU Bank index crashed 2.25 per cent to a low of 8,108 around 10:40 AM.In comparison, the NSE Nifty 50 index slipped 1.34 per cent to 22,833. The Nifty Bank shed 1.73 per cent, and the Nifty Private Bank index dropped 1.55 per cent.Among individual stocks, Bank of India and Bank of Maharashtra plunged 4 per cent each. Union Bank of India, Canara Bank, Punjab National Bank and Bank of Baroda declined 2-3 per cent. All 12 PSU Banks in the index, including SBI, were down more than 1 per cent each.Thus far in September, SBI, Indian Bank, Bank of India, Uco Bank and Union Bank of India were the major losers, down 7-10 per cent each. The Nifty PSU Bank declined 6 per cent in the same period.Analysts attributed the broad-based sell-off in PSU bank stocks to concerns of a rate hike in the October RBI policy meet as inflation fears continue to mount.G Chokkalingam, founder and chief executive of Equinomics Research says there seems a high probability of a rate hike in October given the sharp surge in bond yields and fears of high inflation.The 10-year government bond yield jumped to 7.12 per cent, quoting at its highest point since May 2026. The US bond yield also appreciated in recent days, quoting around 5.21 per cent."Fears of a sharp rise in inflation as crude oil prices shot back above $100 per barrel, rainfall has been below par (roughly 15 per cent deficit thus far), and globally bond yields are strengthening. These are the key concerns for the banking sector," explains Chokkalingam.Echoing similar concerns, Kranthi Bathini Equity Strategist at WealthMills Securities flags inflationary worries because high crude oil prices are fuelling bets of high interest rates. Worries of a likely consolidation in PSU banks also weigh on the sector.Further, the sentiment seems dented as the Nifty today violated its crucial support at the 23,000-mark in intra-day deals, adds Bathini.Meanwhile, PSU Banks called-off the proposed three-day strike from Monday following a meeting with the Indian Banks Association. The bank union had called for a strike mainly todemand a five-day week for bank employees.Commenting on the banks' strike, the market did not seem worried about the 3-day strike as almost 90 per cent of banking transactions are done online nowadays, Chokkalingam said.The weakness in PSU Bank index is primarily coming from the deterioration in the technical structure, with the broader market sell-off adding to the pressure, says Hitesh Tailor, Technical Research Analyst at Choice Broking."The Nifty PSU Bank Index has broken its major rising trendline support on the daily chart and is now trading below key EMAs. The index has also faced repeated rejection from the 200-Day Exponential Moving Average (EMA), indicating that the recovery attempts are being met with selling pressure. Overall, the setup has turned sideways to bearish," explains Tailor.Going ahead, the analyst sees 8,000-mark as the key support for the Nifty PSU Bank Index. He cautions that a decisive break below 8,000 could lead to further downside. On the upside, Tailor flags 8,350 as the key resistance zone, which is aligned with the 200-Day EMA.
