RBL Bank shares surge 134% in six months; time to buy, sell or hold?

Shares of RBL Bank have surged 135% from their 52-week low in over six months, signaling that the private sector lender is in a strong bullish trend on the Dalal Street. The stock hit a 52-week low of Rs 74.15 on June 20, 2022. In the current trading session, RBL Bank stock hit a 52-week high of Rs 174.25, rising 4.62% intraday against the previous close of Rs 166.55 on BSE.

RBL Bank stock has a one-year beta of 1.80. This signals the stock has very high volatility and carries higher risk. A high-beta stock can rise much faster than the index, but also decline much more steeply during corrections.

The RBL stock has a Relative Strength Index (RSI) of 60.6. A value below 30 indicates that a stock is oversold and a value above 70 signals that the scrip is overbought.  Hence, the stock has a neutral rating in terms of RSI. The stock has a price to equity ratio of15.1, which is lower compared to the industry PE of26.69. This signals that the stock is undervalued.

According to analysts, the stock has breached its crucial resistance zone while scaling its fresh 52- week high and is expected to rise further. In terms of technical charts, the stock has been forming pattern of higher highs and higher lows since it hit 52-week low in June.

During its journey to the fresh 52-week high today, the stock has breached resistance level of Rs 167 formed in the last few sessions. In today’s session, the stock opened flat.  It has risen 14.14% in the last three sessions. Shares of RBL Bank are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages. The stock has gained 18.64% in a year and risen 36.01% in 2022. In a month, the stock has risen 14.86%.

Also Read: RBL Bank shares surge 11% today. Should you buy, hold or sell?

The rally in the banking stock has been powered by a stellar set of earnings for the quarter ended September 2022. The bank reported a standalone profit of Rs 201.55 crore for the September quarter of FY23, rising 6.5 times from the year-ago period on a low base. Profit was affected by higher provisions for bad loans, while the growth was almost flat sequentially.         

Here’s a look at what analysts said about the current leg of rally and prospects of the stock in 2023.

Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas said, "During the recent correction RBL Bank has found support at its 40-day moving average (120) and resumed its uptrend. The current rally can continue till Rs 185 - Rs 190 levels, which is the equality target of wave 1 as per the Elliott wave principle. From a medium-term perspective, the stock has more than doubled during the past six months. As per the weekly charts, RBL Bank is in 5th wave of its impulsive rise which indicates that the stock is in the fag end of its upmove. During 2023, the stock is likely to witness a retracement of the rise and correct till Rs 120 - Rs 110 levels where support in the form of the 200 day moving average (121) and the 61.82% Fibonacci retracement (112) level is placed."

Ashish Manoj Katwa, Technical Research Analyst, Bonanza Portfolio said, "The price has been rising continuously in a bullish channel with Higher Highs and Higher Lows formation and successfully settled just above the 50 Exponential Moving averages Indicating Bullish strength. The stock witnessed a fake breakout near June 2022 which indicates, the seller got trapped. On the weekly chart, RBL Bank has given a breakout of the falling supply trend line. The technical indicator Ichimoku cloud suggests that the price is trading above clouds which now act as a support for the stocks. RSI on the weekly and daily timeframe is above 60 marks reflecting the strong momentum in the price. At the same time, an oscillator Stochastic is also suggested a positive crossover which confirms the continued bullish trend. Based on the above technical structure, one can initiate a long position in RBL Bank at current market price of Rs 173.05 or a fall in the price till Rs 165 level can be used as buying opportunity for the upside target of Rs 245. However, the bullish view will be negated if the price closes below the support level of Rs 136."

Abhijeet from Tips2trade said, "RBL has staged a strong recovery from its lows but faces stiff resistance at 173. A weekly close above this level could lead to targets of 211-245. Support will be at Rs 130."

Osho Krishan, senior analyst - Technical & Derivative Research, Angel One said, "RBL Bank has been in a secular uptrend for the past six trading months. As far as levels are concerned, the immediate support is placed around the 148-150 odd zone. While on the higher end, a decisive breach above Rs 174 could only trigger the next leg of rally towards  Rs 190-194 in a comparable period."

Manoj Dalmia, Founder & Director at Proficient Equities said, “RBL Bank saw a rebound in unsecured retail credit of about 30.5% of loans has boosted loan growth by 12.4% YoY. Due to tight liquidity conditions and the bank’s weak deposit franchise, deposit mobilisation was muted( 5% YoY increase). This will require sustained investments in distribution which could increase operating costs. Investors can accumulate this stock at current levels as it is in a consolidation phase and a further upside of 30% is possible from current levels.” 

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, “RBL has already got into a strong uptrend with rising RSI and near-term support now at  Rs 154 levels, 170 holds as a strong resistance but in all likelihood if this stocks moves above 170 & sustains then further price projection comes to  Rs 180-190 levels.”  

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