Shares of State Bank of India Ltd., India's largest lender, are up 10% so far in the month of February. They are also the third best performers on the Nifty 50 index this month, behind BPCL and Coal India.
SBI was a non-participant in the record-breaking PSU rally of 2023. In a year when the PSE index rallied 80% and the PSU Bank Index went up by 33%, shares of SBI gained only 4%. In fact, SBI commands the highest weightage on the PSU Bank index.
However, the stock has begun the month of February on a very positive note. Here are some factors working in its favour.
On Thursday, ICICI Lombard put out a note on the exchanges saying that it has increased its stake in the lender. Although that's only 0.04%, its a hike nonetheless.
On February 7, CNBC-TV18 highlighted on our dealing room chatter that a leading global fund has become an active buyer in the lender.
Third, just this Friday morning, Chris Wood of Jefferies cut down on his investment in HDFC Bank by 2%. 1% of that went to State Bank of India.
Additionally, the bank also denied reports that it is planning on selling some of its 26% stake it holds in Yes Bank, calling them "factually incorrect."
Lastly, with the kind of run-up that PSUs have seen, investors are now looking for bargain buys in the market.
Currently SBI is trading at 1.5 times FY25 price-to-book, which is in-line with its five-year average of 1.4 times.
Interestingly, Domestic Mutual Funds have cut their stake in SBI for five quarters in a row now.
Out of the 51 analysts that have coverage on State Bank of India, 43 of them have a "buy" recommendation, while four each have a "hold" and "sell" rating.
Shares of SBI are currently trading 0.7% higher at ₹705 and are trading at a record high.
First Published: Feb 9, 2024 11:32 AM IST
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