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Capital infusion fails to lift PSU Bank index

Bhagyashree Vivarekar
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Capital infusion fails to lift PSU Bank index
Of the Rs. 2.11 lakh crore recapitalisation outlay for PSU Banks, government has decided to release Rs. 80,000 crore to these banks in the current fiscal. Following the announcement of the mega recap plan on October 24, 2017, the PSU Banks had given astonishing performance with share prices shooting up more than 50 per cent on a single day on the bourses. Yet again, on Friday, the Indian stock markets have a reason to celebrate after the government received Lok Sabha's nod to release Rs. 80,000 crore.

The infusion will be to boost credit growth and government would ensure bigger piece only to the performing banks. This would help squeeze the gap between capital profiles of private and PSU Banks.

The PSU Bank index had given a Cup and Handle pattern breakout during the end of October 2017. It has however, witnessed a pullback since the mid of November 2017 till date. The index happened to take a major double support on weekly basis at the 50 per cent retracement level of the highly buoyant week in October. However, volumes and Oscillators are not supporting the momentum in the price for a significant bounce back.

Today the index opened with a gap up breaching its downward sloping trendline but it was open-high which refrained the index for gaining further. SBI which holds 64.4 per cent weightage in the index looks weak on the charts where it may give a sharp downside below 300 levels.
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