SBI shares in a downtrend, hit three-month low; time to buy ?

Shares of State Bank of India (SBI) are in a downtrend in the short term, slipping the most-8% in a month. The correction in SBI shares comes amid National Stock Exchange (NSE) cutting its IPO size to roughly Rs 23,500 crore from the earlier planned Rs 30,000 crore. SBI has trimmed its stake sale in the IPO from 1% to around 0.7%. It is expected to receive up to Rs 2,851 crore from the IPO. Hence, India's largest lender will now receive lesser proceeds from the IPO.

The PSU lender had bought shares at a mere Rs 0.8, according to data available in the red herring prospectus (RHP). With the Upper end of the price band fixed at Rs 1,785 apiece, SBI is set to make huge profit on its NSE stock investment.

Another factor, which may have affected sentiment in the stock is that costs on FCNR(B) deposits are likely to surge 15-20 basis points for Indian banks, over and above the interest cost committed to depositors, according to a Business Standard report.

The lenders will have to separately hedge the dollar liability arising from interest payments on these deposits. The cost of hedging this currency exposure is influenced by forward premium levels and the interest rate differential between the two currencies.

Meanwhile, SBI shares fell to a three-month low of Rs 979.90 in the current session. Market cap of the lender fell to Rs 9.04 lakh crore. SBI shares are trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.

Virat Jagad, Sr. Technical Research Analyst at Bonanza Portfolio said, "SBI remains in a weak trend, trading below all major EMAs with declining RSI and continued selling pressure. The stock has broken key support around Rs 1,000, weakening the setup further. Avoid fresh buying; existing positions can be exited below Rs 1,000, with downside risk toward Rs 950–925."

Meanwhile, brokerage Axis Securities has a price target of Rs 1280 on the SBI stock. While maintaining its 'buy' recommendation, Axis said the lender remains well-positioned to capitalise on India's accelerating economic growth through its dominant franchise, improving operational efficiency, strong capital position, and increasing participation in emerging sectors such as renewable energy, data centres, and semiconductors.

According to the brokerage, the stock enters FY27 from a position of considerable strength, backed by healthy capitalisation, strong asset quality, robust growth momentum, and a growing presence in emerging sectors. Axis expects the bank to deliver Credit/Deposit/NII/Earnings CAGR of 14%/11%/15%/9%, respectively, over FY26-28E while consistently maintaining RoA at around 1%.