SBI share price analysis: Is the State Bank of India a good buy?

The State Bank of India (NSE: SBIN) share price retreated sharply on Friday after the biggest Indian bank announced plans to raise additional capital. The shares retreated to a low of ₹580, a few points below the year-to-date high of ₹593. In all, the stock has jumped by more than 17% from the lowest level this year.

SBI to raise additional capital

The State Bank of India is the biggest bank in the country with over 45 million customers. It has a quarter of the country’s market share in the banking industry, making it an important institution in the country.

SBI Bank has benefited from the ongoing recovery of the Indian economy. The economy expanded by over 7% in 2022 and the statistics agency expects it to grow by over 7% this year. This growth will make it the fastest-growing major economy.

The bank has seen a strong loan growth this year as companies seek to expand their businesses. Many companies are also seeing more orders as manufacturers move from the Chinese market. China and the US are going through a major conflict.

The most recent bank news is that SBI announced that it will raise ₹500 billion this year using debt instruments. At the current rate, this amount stands at about $6.06 billion. It hopes to use these funds to fund its growing loan book, which is growing at a faster pace than deposits. 

The bank said that demand for loans remains there even as the country’s interest rates rises. SBI had previously raised ₹37.17 billion in March this year. The most recent results showed that the company’s profits jumped by 83% in its fourth quarter. 

This performance was due to strong loan growth and the fact that provisions for bad credit dropped sharply during the quarter.

SBI share price forecast

SBI chart by TradingView

The daily chart shows that the State Bank of India stock price has been in a strong bullish trend in the past few months. It jumped from a low of ₹492.60 in April to a high of ₹593 this month. The stock has moved above the key support at ₹556.85, the highest point on March 8 of this year.

SBI shares are above the 25-day and 50-day moving averages while the volume has started easing. Despite this, I suspect that the share will continue rising as buyers target the key resistance point at ₹615.80.