Union Bank of India’s 1.36% Weekly Dip Amid Strong Valuation Upgrade and Market Resilience

Monday, 2 February 2026: Sharp Decline Amid Broader Market Weakness

Union Bank of India opened the week on a weak note, closing at Rs.170.55, down Rs.10.10 or 5.59% from the previous close. This decline was sharper than the Sensex’s 1.03% drop to 35,814.09, reflecting sector-specific pressures or profit-taking after recent gains. The stock traded on relatively high volume of 568,576 shares, indicating active participation. Despite the negative start, this day set the stage for the subsequent upgrade announcement that would influence the stock’s trajectory.

Tuesday, 3 February 2026: Upgrade to Strong Buy Spurs Recovery

On 3 February, Union Bank’s stock rebounded strongly, gaining Rs.3.80 or 2.23% to close at Rs.174.35. This recovery coincided with MarketsMOJO’s upgrade of the bank’s rating from Buy to Strong Buy, citing robust valuation and financial metrics. The Sensex also rose 2.63% to 36,755.96, but Union Bank’s gain was notable given the prior day’s sharp fall. The upgrade highlighted the bank’s very attractive valuation, with a low price-to-earnings ratio of 7.09 and a price-to-book value near 1.03, signalling undervaluation relative to peers. The bank’s strong profit growth, improving asset quality, and institutional backing were key factors driving renewed investor confidence.

Wednesday, 4 February 2026: Continued Gains on Valuation Optimism

The stock extended its gains on 4 February, rising Rs.1.70 or 0.98% to close at Rs.176.05. The Sensex also advanced 0.37% to 36,890.21. The positive momentum was supported by further recognition of Union Bank’s valuation shift to ‘very attractive’, with a PEG ratio of 0.56 indicating undervaluation even after accounting for earnings growth. The bank’s dividend yield of 2.76% added to its appeal, providing a steady income stream alongside capital appreciation potential. These factors reinforced investor interest amid a broadly positive market environment.

Thursday, 5 February 2026: Resilience Despite Sensex Dip

On 5 February, Union Bank’s stock price rose Rs.1.80 or 1.02% to Rs.177.85, even as the Sensex declined 0.53% to 36,695.11. This divergence highlighted the stock’s relative strength and positive technical momentum. Volume surged to 687,800 shares, reflecting heightened trading activity. The bank’s strong provisioning coverage ratio of 76.68% and low net NPA of 0.51% underscored its improving asset quality, supporting the stock’s resilience amid sector volatility.

Friday, 6 February 2026: Modest Gain Caps the Week

Union Bank closed the week at Rs.178.20, up Rs.0.35 or 0.20% on the final trading day, while the Sensex gained 0.10% to 36,730.20. The stock’s weekly performance was a decline of 1.36%, underperforming the Sensex’s 1.51% gain. However, the week’s price action reflected a recovery from the sharp Monday drop and was supported by the bank’s upgraded Mojo Grade of Strong Buy and very attractive valuation metrics. The stock’s long-term returns remain impressive, with a five-year gain of 416.82% compared to the Sensex’s 64.00%, highlighting sustained shareholder value creation.

Key Takeaways from the Week

The week was marked by a significant upgrade in Union Bank of India’s investment rating to Strong Buy by MarketsMOJO, reflecting improved valuation, financial strength, and technical momentum. The bank’s valuation metrics stand out in the public sector banking space, with a low P/E of 7.09 and a PEG ratio of 0.56, signalling undervaluation relative to earnings growth. Its dividend yield of 2.76% adds to the stock’s attractiveness for income-focused investors.

Financially, Union Bank demonstrated robust profit growth with a CAGR of 63.27% and strong asset quality, evidenced by a gross NPA ratio of 3.06% and net NPA of 0.51%. The provision coverage ratio of 76.68% provides a buffer against credit risks. The bank’s return on equity of 14.57% and return on assets of 1.24% indicate efficient capital utilisation and profitability.

Technically, the stock showed resilience after a sharp Monday decline, recovering steadily through the week and outperforming the Sensex on multiple days. However, the weekly close at Rs.178.20 represented a 1.36% decline from the prior Friday, underperforming the Sensex’s 1.51% gain. This suggests some profit-taking or sector headwinds despite the positive fundamental backdrop.

Conclusion: A Week of Fundamental Strength Amid Market Volatility

Union Bank of India’s week was defined by a strong fundamental upgrade and valuation re-rating, which helped the stock recover from early losses and demonstrate relative strength versus the broader market. The upgrade to a Strong Buy rating and the shift to a ‘very attractive’ valuation category underscore the bank’s improving financial health and market positioning.

While the stock closed the week slightly lower, the underlying metrics suggest a solid foundation for future performance. Investors should note the bank’s robust profit growth, improving asset quality, and attractive dividend yield as key positives. The slight underperformance relative to the Sensex may reflect short-term market dynamics rather than a change in the bank’s fundamental outlook.

Overall, Union Bank remains a noteworthy stock within the public sector banking space, combining value, quality, and momentum factors that merit close attention in the coming weeks.

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