PSU Banks Gear Up For Reform Push: Union Bank May Test ₹140 If Momentum Sustains, Says SEBI Analyst

Shares of Union Bank of India rose 1.4% on Thursday, with public sector banks in focus ahead of the Finance Ministry’s two-day “Public Sector Bank Manthan” starting Sept. 12. 

The meeting will gather top management of state-run lenders to chart next-generation reforms and advance the Enhanced Access and Service Excellence (EASE) program.

Technical View

SEBI-registered analyst Deepak Pal said Union Bank is showing early signs of a turnaround, with the stock bouncing from ₹127.90 to finish near ₹132.50 and forming a strong green candle on the chart. 

He noted that it has climbed back above the 100-day moving average, which is encouraging in the short term, though it still needs to clear the 50-day and 200-day moving averages to confirm a stronger trend. 

A medium-term trend will only be confirmed above ₹136–₹140, he said.

Pal added that the Parabolic Stop and Reverse indicator has shifted below the price, pointing to a fresh bullish trend. The 14-day Relative Strength Index is sitting at 51, which Pal said gives the stock room to climb further before it looks overbought. A push above 60 would add strength to the rally. 

He noted that the Moving Average Convergence Divergence is still in negative territory but narrowing, a sign that selling pressure is easing and a bullish crossover could be on the way. 

On price levels, he pegged support at ₹128–₹130 and then at ₹124, while resistance stands at ₹136–₹140. Clearing that barrier could open the door to ₹148–₹150.

Sustaining above ₹128 keeps the trend positive, he added, with higher lows on the chart suggesting base building.

Fundamental View

Pal said Union Bank has underperformed recently but is showing signs of recovery, with valuations still attractive versus private banks. 

These include better asset quality, healthy loan growth, improving net interest margins, more current and savings account (CASA) deposits, and declining gross non-performing assets (NPAs). 

At the sector level, strong credit growth, low inflation, and robust demand are supportive. However, state-run banks remain sensitive to bond yields, government borrowings, and cost of credit, the analyst added.

Key Triggers

Pal said Union Bank’s second-quarter results for FY26, due in October, may show healthy credit growth, though margins could face pressure from higher funding costs. 

He added that a positive earnings surprise, a dovish Reserve Bank of India policy stance, or government capital infusion would benefit public sector banks. Global factors such as U.S. Federal Reserve rate cuts and bond yields will also influence the sector.

What Is The Retail Mood?

On Stocktwits, retail sentiment was ‘neutral’ amid ‘normal’ message volume.

Union Bank’s stock has risen 9.2% so far in 2025.

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