Indian benchmark indices kicked off the week on a positive note and scaled new highs on the back of positive global cues triggered by the US Fed rate cuts last week. BSE Sensex jumped 384.30 points or 0.45 per cent, to end the session at 84,928.61. NSE's Nifty50 gained 148.10 points, or 0.57 per cent, to close at 25,939.05 for the day.
Some buzzing banking stocks including ICICI Bank Ltd, HDFC Bank Ltd and Kotak Mahindra Bank are likely to remain under the spotlight of traders for the session today. Here is what Jigar S Patel, Senior Manager - Technical Research, Anand Rathi Shares and Stock Brokers has to say on these stocks ahead of Tuesday's trading session:
ICICI Bank | Avoid
At this point, ICICI Bank appears to be highly overextended because it is trading significantly above all key exponential moving averages (EMAs) such as the 20, 50, 100, and 200-day EMAs. This indicates that the stock's price has surged well beyond its typical trend, suggesting that it may be due for a 'mean reversion' where the price could potentially pull back to align more closely with its average levels. Such a deviation makes the stock more susceptible to a correction. Therefore, investors are advised to avoid taking new long positions at the moment, as the risk of a downward correction is heightened. For those who have already bought, it’s recommended to book profit in the zone of Rs 1,320-1,340
Kotak Mahindra Bank | Buy | Target Price: Rs 2,050 | Stop Loss: Rs 1,825
Recently, Kotak Bank breached a significant bearish trendline on its weekly chart, marking a potential shift in market momentum. The stock, after breaking through this trendline, entered a consolidation phase, where it effectively retested the trendline to validate its new role as a support level. This retest has now turned into a bounce, as evidenced by the recent rebound from the trendline, signalling renewed bullish sentiment among investors. Additionally, Kotak Bank has consistently adhered to the 200-day Exponential Moving Average (DEMA) High-Low band on the daily chart, which further strengthens the possibility of continued upward momentum. This adherence to the 200 DEMA often indicates that the stock is gaining strength and is likely to sustain its upward movement. However, after already rallying 180 points since breaking the bearish trendline, a cautious approach is recommended. We advise buying Kotak Bank within the range of Rs 1,910-1,890 for an upside target of Rs 2,050, with a stop-loss placed at Rs 1,825 on a daily close basis to manage risk effectively.
HDFC Bank | Avoid
In the past month, HDFC Bank has experienced a significant rally, gaining nearly Rs 170, which translates to a 10-11 per cent increase in a relatively short time. This rapid upward movement has pushed the stock's price well above key exponential moving averages, including the 20, 50, and 100-day EMAs. While this may seem bullish, it also makes the stock susceptible to a pullback, as such sharp moves often correct. Historically, the stock has faced strong selling pressure in the Rs 1,775-1,800 price zone, which has acted as a resistance level on multiple occasions. Given this context, it is advisable to adopt a cautious approach and avoid initiating new long positions at the current levels. For those who already hold the stock, this resistance zone presents an opportunity to book profits rather than chasing further gains in a potentially overextended market scenario.