Rs 8 Lakh Crore Market Cap: PSB Giant SBI Jumps 10%, Surpasses Rs 900/Share Mark; Buy Or Not?

State Bank of India Ltd, the nation's largest lender, has surpassed the Rs 8 lakh crore mark in market capitalisation. This achievement comes as the stock soared to a new record high of Rs 912 during Monday's session, marking a remarkable ascent since the beginning of the year.

Since March 7, when it first crossed the rs 7 lakh crore threshold, SBI has seen a meteoric rise, adding over Rs 3 lakh crore in market capitalisation in 2024 alone. The stock's performance has been nothing short of remarkable, with gains of 42% so far in 2024. However, the Relative Strength Index (RSI) suggests caution, hovering at 74, signalling that the stock is in "overbought" territory, as readings above 70 indicate.

SBI now ranks as the third most valuable bank by market capitalisation, trailing only HDFC Bank and ICICI Bank. Notably, ICICI Bank also breached the Rs 8 lakh crore mark on the same day, reflecting the robustness of India's banking sector.

The achievement places SBI among a select group of companies in India to have reached such a valuation. Previously, the likes of Reliance Industries, Tata Consultancy Services, HDFC Bank, Bharti Airtel, Infosys, and ICICI Bank have all attained this milestone.

The surge in SBI's market capitalisation is backed by robust financial performance. The bank's strong showing in the March quarter surprised analysts, with a 5% sequential growth in loans and the lowest annualised slippage ratio in four quarters. Moreover, asset quality improved sequentially, further boosting investor confidence.

Of the 51 analysts covering SBI, a staggering 40 have a "buy" rating on the stock, underscoring the bullish sentiment surrounding the bank. Eight analysts recommend a "hold," while only three advocate a "sell" stance, reflecting widespread optimism among market experts.

The bullish trend in SBI shares is in line with broader market sentiment, buoyed by political developments. Exit polls conducted on June 1 indicated a decisive victory for the BJP-led NDA in India's general elections. Projections of over 350 Lok Sabha seats for Prime Minister Modi's government surpassed many brokerage's bullish scenarios, propelling stocks linked to the government's growth plans, including those in capital expenditure and public sector units.

Analysts at Nomura foresee a positive trajectory for sectors tied to government spending, particularly infrastructure and manufacturing. Sustained focus on capital expenditure and fiscal consolidation are expected to drive growth in these segments, potentially outperforming other sectors in the near future.

As of 1:30 pm on the National Stock Exchange, SBI shares were trading at Rs 911.70 per share, reflecting gains of nearly 10%. Over the past year, the stock has delivered returns, surging more than 55%. Looking further back, the stock has seen extraordinary growth, soaring over 110% in the last one year.

State Bank of India's ascent to the Rs 8 lakh crore market capitalisation milestone reflects its prominence in India's financial landscape. With a strong performance backed by positive analyst sentiment and favourable political dynamics, SBI appears poised for continued growth, signalling optimism for investors and the economy alike.