Twin tailwinds of faster economic growth and long-awaited sectoral re-rating. 5 PSU banks with an upside potential of up to 24%

In March's market correction, the initial correction was led by PSUs. Both PSU banks & non-bank PSU. Given that both sets of gained sharply, profit booking was natural. But if one looks at the broader contours it is clear that while the PSU banks corrected, the magnitude of the correction was not very high. For example, if after gaining over 100% in 2023, the stock corrects 10-15 %, it is a bullish sign and not bearish. If one looks at the table, in all time frames the selected PSUs have delivered positive returns except in one stock where 1-month returns are negative. This trend is normally witnessed when there is more delivery-based buying based on positive fundamental changes. On two counts, first the improvement in the actual operating matrix like credit off-take and a much better NPA situation. Second is the change in the valuation matrix on which the Street is evaluating them. As the economy continues to move on a path of higher growth, they probably are the best to play the theme, if you are able shed historical baggage which sometimes hit the Street.