The shares of PNB have reported impressive gains all through as the stock has gained 38.5% since the beginning of November 2022.

2022 began fairly muted as the stock began trading at Rs 37.30 per share and appeared range bound. However, when fears of Russia’s invasion of Ukraine was tanking the markets, PNB’s stock was one of the worst affected stocks as it breached its support & declined 14.32% in a single day!

When Russia’s invasion of Ukraine began, the stock held its own for a few sessions but began declining soon after. To make matters worse, the company published its Q4FY22 results wherein the bank reported a 66% decline in net profits after which the stock fell 13.5% in a single session!

The stock touched lows soon after, but began rising in July. Come October, the stock reclaimed its initial price of Rs 37.30 and by the end of November touched a high of Rs 55.65 per share, a price the stock hadn’t reclaimed since February 2020. The share saw an 8% jump when it received DIPAM’s approval to divest the entirety of its stake in UTI AMC.

But PNB is not the only banking stock which has been showing strong growth. India’s largest PSU, SBI, recently reached a lifetime high of Rs 622.70 per share and grew 15.4% in less than two months. ICICI Bank has reported a growth of 38.6% in 5.5 months. NIfty Bank, the NSE index pertaining to the Indian banking sector, recently breached the 43,000 mark, reaching a new lifetime high and growing over 20% YTD!!

In fact, Nifty Bank has outperformed Nifty 50 itself! Banking stocks are witnessing significant growth on account of impressive quarterly results, robust balance sheets and improving asset quality. Credit growth is currently around 15.5%, which shows the potential of the credit landscape in India. Even Foreign Institutional Investors (FIIs) are pumping money into banking stocks as IT and Tech stocks face global pressure. 

What can we expect from PNB in the near future? 

The stock of PNB has seen a significant rise in the recent past. The sale of its stake worth over Rs 1,300 crores, significant improvement in asset quality and an upgrade of the bank’s AT-1, Tier-2 bonds from ‘Stable’ to ‘Positive’ by CARE ratings are major wins for the bank.

However, the bank’s latest quarterly earnings reported a 63% decline in profits on account of higher provisioning even though its net interest and total income saw growth during the same period. Moreover, an audit has flagged irregularities in the bank’s Kozhikode branch to the tune of over Rs 20 crores.

The RSI indicator is well over the 70 mark which could be an indicator of an ‘Overbought’ situation. Furthermore, over the past 5, 20, 50, 100 and 200 days’ moving averages, the price of PNB has increased. As such, the stock may see some near term weakness but may test its next resistance point at Rs 56.25 per share in the coming weeks.

Report by Jobaaj Group.