Vaishali Parekh on PSU Bank: Punjab & Sind Bank & Central Bank up 30-40% in a week. Should you buy, sell or hold?

"Bank Nifty outperformed the Nifty index in the last one or two weeks and is hovering in a tight range of 42700 and 43500 zone," says Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher Pvt. Ltd.

In an interview with ETMarkets, Parekh, with a total work experience of around 16 years, said: “One can choose to go sector-specific with select stocks for the particular counter and go for short-term trading ideas” Edited excerpts:

Q) Sensex and Nifty50 traded flat with a negative bias for the week ending 9 December. What led to the price action – is it profit-taking or global cues?
A) Nifty after peaking out near 18887 levels, witnessed some profit booking, led by the major frontline IT stocks witnessing some profit booking and shedding their gains from their peak levels, accompanied by the Metal sector also lost some momentum.

Also, pharma stocks like Sun Pharma, Cipla, and Dr Reddy Laboratories witnessed some slides in the last week, which all dragged the index.

Q) Which is your take on the market for the coming week? Important levels to watch out for Nifty and Nifty Bank?
A) The Nifty indicated a Bearish Engulfing Candle formation on the daily chart with some weakness visible, and if it decisively breaks the 18500 levels, we may see profit booking go to the 18200 levels, the next major crucial support zone for the index.

Bank Nifty has overall outperformed the Nifty index in the last one or two weeks maintaining between the tight range of 42700 and 43500 zone and currently just moving above the range has shown strength.

Some of the frontline banks like Axis Bank, ICICI Bank and IndusInd Bank are in a strong zone with bias visibly maintained positive.

Only a decisive breach below the 42700 zone would weaken the bias and can anticipate further slide for the index.

Q) Any strategy that traders can deploy for the week?
A) One can choose a sector-specific with select stocks for the particular counter and go for short-term trading ideas since the Nifty index need to gain above the 18500-18600 zone decisively to establish some conviction for further upside movement.

Q) In terms of sectors, Capital Goods emerged as winners while IT took a hit – what led to the price action?
A) Technically, IT stocks are still unable to participate in the ongoing rally, with IT giants like Infosys, TCS, and HCL Tech all witnessing profit booking and could not carry on the momentum further, which led to the slide in the last week.

Whereas Capital Goods stocks like Larsen Toubro and Siemens have contributed well along with Cummins to the index, which gave a decent gain in the last one or two weeks.

Q) PSU banks led the rally in the week gone by -- Punjab & Sind Bank was up over 40% in a week. followed by the Central Bank of India, which rose over 30%. What should investors do – buy, sell or hold?
A) Punjab & Sind Bank: Up 45% in a week | Hold | Target Rs 42

Punjab & Sind Bank has given a decent rally in the last month and is already in the highly overbought zone with resistance visible near the 35 zone.

Some profit booking cannot be ruled out with immediate support maintained near the 29 zone. One can hold the stock, maintaining this support, and a decisive breach above 35 zones would trigger a fresh breakout with the next target of 42 levels.

Central Bank of India: Up 30% in a week | Book Profits | Target: Rs 37-38
Central Bank of India also has given a breakout above the previous peak zone of 29, where there was resistance and now is heading for its next target of 37-38 area, which was the previous major high level.

Since the indicators all are at their highly overbought zone, chances of profit booking cannot be ruled out, and one can trail their stop losses during the trading session, which would be a better strategy at this juncture.

Q) Any 3-4 trading ideas for the next 1 month?
A) HDFC Bank, Kotak Mahindra Bank, M&M, ITC, and Axis Bank, which are all in their positive trend, looks favourable at these levels with OMC stock like HPCL.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)