In an earlier piece, I had pointed out that Atul Suri (Rakesh Jhunjhunwala’s right hand man on the technical side) had predicted that 2015 would be the year for PSU Bank stocks. Atul’s theory is brilliant because it proceeds on the basis that PSU Bank stocks will enjoy dual benefit from the interest rate cuts. Apart from the benefit that all rate sensitive stocks would derive, PSU Banks will gain immensely from the capital appreciation in the value of the gilt bonds held by them.
Amar Ambani and his technical whiz, Pritesh Mehta, have come to the same conclusion, albeit on technical parameters.
In their latest report, the duo has argued convincingly that an in-depth analysis of the CNX PSU Bank index indicates that the consolidation phase has came to end, and that the index is likely to enter a new orbit. It is pointed out that the Index has given a close above the neckline of an inverted head & shoulders pattern. Also, the breakout was accompanied with the formation of “Three white soldiers” candlestick pattern. Unless there is a bearish reversal on the weekly chart, the uptrend is here to stay. It is stated that the CNX PSU Bank Index is likely to target the 6,000 mark in the medium term.
The duo has identified three PSU Bank stocks which appear to have the potential for maximum gains over the next six months.
Of course, we must remember that these stock picks are based on technical parameters and one must strictly observe “stop loss” if things go haywire.