PSU banks steal the show this week; UCO Bank surges 54%

New Delhi: Domestic benchmark indices saw a muted week as they lost close to 1% amid rate hike worries, recession fears and a weak global market setup.

The 30-pack Sensex and its 50-pack counterpart Nifty50 shed 1% each for the week, whereas smaller counters outperformed larger peers.

Despite inline inflation numbers in the US, the Federal Reserve maintained its hawkish tone with another rate hike of 50 basis points, which triggered a selloff in the global markets. A weaker rupee also led to a rise in FPI pullout from Dalal Street.

Volatility in the market this week was dictated by the release of favourable inflation numbers, which were offset by major global central bank’s aggressive decisions, said Vinod Nair, Head of Research, Geojit Financial Services.

"However, the Fed startled the market by maintaining its hawkish tone as investors were expecting a softer approach after the release of better-than-expected inflation numbers," he added.

In the BSE500 index, about 200 stocks settled in the red, whereas over 300 stocks settled with cuts for the week. About 20 stocks gained more than 10%, whereas only two counters dropped 10% or more for the week.

PSU banks stole the show, extending their gains. UCO Bank surged over 54%, whereas Indian Overseas Bank gained 30%. Meanwhile, Punjab & Sind Bank gained 20%, and Bank Of Maharashtra and Central Bank of India added 13% each.

The Indian banking sector continued with its all-round performance in Q2FY23 with a further uptick in loan growth, sharp sequential NIM improvement, and continued reduction in stress levels, said Haitong Securities.

Public sector banks have done well so far and expectations are that they may continue the robust performance in the coming quarters, Morgan Stanley said in its report.

Among other shares, General Insurance Corporation (GIC) of India and EPL jumped 17% each.

Suzlon Energy rose 15% following an order win while Mahindra CIE Automotive was up by 14% this week amid reports that the company may acquire a stake in Strongsun Solar. Prabhudas Lilladher has suggested buying Mahindra CIE with a target price of Rs 400.

Kalyan Jewellers India (13% up), CSB Bank (12% up), Infibeam Avenues (12% up), Sterlite Technologies (11% up) and The New India Assurance Company (11% up) were other stocks in the gainers' pack.

Vinit Bolinjkar from Ventura Securities believes that the CSB Bank has put in a lot of effort in rebuilding its model and he is positive on the private lender. ICICI Direct has suggested to buy Sterlite Technologies with a target price of Rs 220.

Hathway Cable & Datacom, Rajesh Exports, Gujarat State Fertilizers & Chemicals, Jindal Stainless and PNB Housing Finance also clocked double-digit gains for the week.

Both IIFL Securities and JM Financial have buy ratings on PNB Housing Finance with a target price of Rs 507 and Rs 550, respectively.

Among the losers, GMM Pfaudler plunged 14% on a weekly basis after its promoter entity offloaded a 30% stake on Friday, whereas Sonata Software tanked 11%. Anand Rathi Research has a target price of Rs 660 on Sonata Software.

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