7 lead PSU Banks – Statistically, which bank in the sector to focus on and why?

PSU Banks have been performing of late. Which one should you go for in the long, medium or short term.

Let us examine how leading Public Sector Banks are performing on fundamentals, momentum and market out-performance criteria.

Fundamentals : Based on the criteria of Return on Equity (ROE) and Return on Assets (ROA) SBI and Indian Bank top the list. On the criteria of Price to Book (P/B valuation) SBI looks to be most expensive but that is the way it has been all along. After all, SBI is the largest, the most crucial strategically and among the best managed PSU Banks, commanding premium valuations

Longer duration out-performance : Nearness to the All Time High (ATH) for a stock and the maximum one year returns could be good criteria for determining which banks are outperforming in the market thereby indicating which of them are best valued by the markets. SBI, Bank of Baroda and Indian Bank appear to be the best bets on this criteria

Current Momentum : The current momentum in terms of variation from 50 DMA (percentage higher or lower from their 50 day simple moving averages) and one month returns in terms of market price. Bank of Baroda and Canara Bank are at the top making them favoured ones for momentum trading.

Your time frame determines the right selection of a scrip

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