Sector outlook 2019: Nifty PSU Bank

The Nifty PSU Bank Index is designed to reflect the performance of the public sector banks. Among the constituents, State Bank of India and Bank of Baroda have the highestweightage of 71.84 and 7.33 per cent, respectively. The Nifty PSU Bank index disappointed investors in 2018 with a negative return of 16.55 per cent as against the stellar return of 24.09 per cent in the calendar year 2017.

Since the PSU bank recapitalization high (October 2017), the index is consistently trading in the lower top, lower bottom sequence.  Recently, after forming a strong base around the level 2,750, the index formed a significant bullish candle on the weekly scale as on the weekend of December 14, 2018. Thereafter, it witnessed a pullback. The index, on the way up, has managed to clear the downward sloping trendline hurdle on the weekly time frame. 

Among momentum oscillators, the 14-period weekly RSI is on a rising trajectory. According to a MACD analysis on the Weekly time frame, there is a centreline bullish crossover, which is a positive signal. Considering all the above technical factors, we believe Nifty PSU Bank has the potential to deliver a stellar performance in the calendar year 2019.