SBI shares fall for five straight sessions; what’s next?

Shares of State Bank of India (SBI) have remained under the grip of bears this week. The stock has fallen from Rs 571.30 ( the closing price of June 16) to Rs 554.70 (the intraday low) on June 23, 2023. In fact, the banking stock has plunged 4.51% in a month, carrying forward the losing streak in the current week. The banking scrip is also down 9.29% in 2023.  

In the current session, SBI shares fell 1.5% to Rs 554.70 on the BSE. Market cap of the bank declined to Rs 4.95 lakh crore on BSE. Total 4.81 lakh shares changed hands amounting to a turnover of Rs 26.82 crore on BSE. The SBI stock hit a 52 week high of Rs 629.65 on December 15, 2022 and a 52 week low of Rs 446.10 on June 23, 2022. Till date, the stock has gained 24.34% from its 52-week low.   

In terms of technicals, the relative strength index (RSI) of SBI stands at 38.1, signaling it's trading neither in the overbought nor in the oversold zone. SBI stock has a one-year beta of 1.2, indicating very high volatility during the period.  

Abhijeet from Tips2trades said, "SBI has been very bearish but also close to oversold levels on the Daily charts with next support at Rs 545. Till a daily close above resistance of Rs 565 is not achieved, investors should avoid buying."

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher  said, "The stock has witnessed a short correction moving below the significant moving averages of 200 period MA and 50EMA of around Rs 567 weakening the bias and anticipating for further slide in the coming days. The near term support from here on is at around Rs 537-540 zone and a decisive breach below that shall turn the trend weak overall. At the same time, a decisive move above Rs 568 zone is necessary to improve the bias and establish some conviction for further upward movement."

Financial services firm Motilal Oswal has maintained a buy call to the banking stock with a target of Rs 700. “SBI has reported further improvement in asset quality, with PCR improving to 76% (98.6% on the corporate book) in FY23. Controlled restructuring (0.8%), low SMA pool (10bp) and 100% coverage on SR portfolio provide comfort and would keep credit costs under control. We reiterate BUY with a target price of Rs 700,” said the brokerage in mid-June.  At that time, the price of stock stood at Rs 571. 

V.L.A. Ambala (SEBI Registered Research Analyst), Stock Market Today (SMT) said, "After a little pause the SBI stock shrunk almost 3.5% in last five days due to profit booking. It’s a quality stock but we can see a more pressure if it fails to sustain above  Rs 540 (which was its old resistance levels for almost 2 years). One should wait and watch for one or two more days and observe its closing level. If it closes above Rs 576, one can hold it with a stop loss of Rs 530 for the targets of Rs 585,592,600 and 610. If it closes below Rs 535, it's better to book profit until it gives fresh signals for buying."

According to brokerage KRChoksey, the banking stock is expected to touch the Rs 750 mark in a year. The stock of the country’s largest bank has already gained 188.57% in three years and risen 23% in a year.  

Here’s a look at four factors which KR Choksey mentioned while assigning a buy call with a target price of Rs 750 on SBI.   

1.) The lender has a diversified range of products and services through its various branches and outlets, joint ventures, subsidiaries and associate companies. The bank serves as a benchmark for the Indian economy because it is the market leader in the Indian banking industry, said the brokerage.    

2. The bank is well-capitalized to handle any additional risk on its portfolio due to uncertainty. SBI’s asset quality has steadily improved over the years. The fall in slippages has been sharp for the bank, owing to strong recoveries and upgrades. We expect the slippages to remain moderate in the upcoming quarters.  

3. The bank's largest segment is retail and digital banking in terms of the loan portfolio. The bank expects there tail lending segment to be strong, aided by robust growth in the Xpress credit segment.  

4. SBI has positioned itself as one of the best-in-class players in the liability franchise market. With strong brand equity and abroad presence in India through its branches,the bank has a robust customer base for its deposits. SBI will continue to aim at increasing the CASA ratio with an improved focus on the current account growth and, simultaneously, maintain its leadership position in the savings and overall deposits.   

SBI reported a sharp year-on-year (YoY) rise in its fourth-quarter profit during the financial year 2022-23 (FY23). Q4 profit surged 83.18 per cent to Rs 16,694.51 crore against Rs 9,113.53 crore in the same period a year ago. Sequentially, the lender recorded a 17.52 rise in its March 2023 quarter profit. The bank earned Rs 92,951.06 crore as interest income in Q4 FY23 against Rs 70,733.25 crore in the year-ago period.  

The lender also announced a dividend of Rs 11.30 per equity share. The bank's Board has declared a dividend of Rs 11.30 per equity share (1,130%) for the financial year ended March 31, 2023.   

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