Why Banking stocks gaining so much?
After decision to close all notes of Rs.500 & Rs.1000 by Government of India, Banking stocks have jumped almost 12-25 percent in just two days. PNB which was moving around 134-140, has now hit 52 week high of Rs.161 in just 2 days. SBI which was moving around Rs.255 is now at Rs.282. ICICI Bank has also played a lead role in this sharp jump. But the question is why this happened and would it continue?
As we all know, the main source of changing old currency and to convert it into new currency is only Bank. Peoples can change the 500 and 1000 notes by using their Bank account. We can not estimate about the Amount which would be converted. But the point is all the Amount which would be distribute at Bank to get new Notes would remain in Banks as government has not discussed clear process about what would happen with old notes. All the banks which was not working or inactive from last few months would get lot of work. This would result in positive impact on Banks revenue. Use of Banks would also become more. The use of Net-banking and Credit/Debit cards would also increase. Population would become more dependent on use of banks. This would also create Large amount of Credit in Banks. All this reasons are responsible for the sharp rise in Market valuation of Most of the Banks. Banks which operates large amount of Bank accounts would been affected most and that’s why stocks like SBI and PNB has gained so much.
Which Banking Stocks should you buy now?
Investors who wants to buy Bank stocks can buy those stocks which have not performed till now or not much good as expected. But some stocks can also be taken by knowing their Capability and fundamentally strong or not.
BOI can be taken as bet because stock is near to it’s 52 week high but the performance of bank from last few months have improved. Buy with target of Rs.135
PNB is another stock which can be taken with targets of Rs.174
ICICI Bank is also buy which can show the levels of 308 in this month( November ).
Bank of Baroda can also taken in buy list with target of Rs.180
IDBI Bank can buy with target of Rs.84
Syndicate Bank would a better choice with target of Rs.87
Union Bank is also good choice to buy with target of Rs.159
Buy IOB with target of Rs.32
SBI can also be taken with target of Rs.292.
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