HDFC Bank, Kotak Bank, ICICI Bank: How to trade banking stocks ahead of Q4 results?

Domestic equity markets on Tuesday extended weakness for the second straight session. The BSE Sensex declined 183.74 points, 0.31 per cent, to 59,727.01. The NSE's Nifty dropped 46.70 points, or 0.26 per cent, to 17,660.15.

Banking stocks outperformed the headline peers, with large cap banking counters such as HDFC Bank, Kotak Mahindra Bank, ICICI Bank likely to be in limelight going ahead. Here is what Pravesh Gour, Senior Technical Analyst at Swastika Investmart has to say on these stocks ahead of Wednesday's trading session:

Kotak Mahindra Bank | Buy | Target Price: Rs 1,920-1,950 | Stop Loss: Rs 1,750
Kotak Mahindra Bank has been moving in a long consolidation range on the weekly chart since November 20. It has formed a Double Bottom formation at around Rs 1,650-1,700 levels/ The same has been confirmed on the breakout above Rs 1,750 level. The formation looks lucrative, as the stock is trading above its key moving averages. On the downside, the Rs 1,750 level is an important psychological support level, below which one can see Rs 1,700 level due to correction. On the upside, the Rs 1,920 level is acting as an important trend line resistance; above this, one can expect the level of Rs 1,950 in the near-short term. Short-term traders, who have positions, can hold the stock for the above-mentioned target.

HDFC Bank | Buy on Dips | Target Price: Rs 1,700-1,750 | Stop Loss: Rs 1,600
HDFC Bank witnessed the breakout of a Triangle formation. In the past, it retested its breakout level at around Rs 1,530 and started a new leg of rally towards Rs 1,700 level. The overall structure looks lucrative, as the stock trades above its key moving averages. The MACD indicator is supporting the current strength. The momentum indicator RSI is also positively poised. On the upside, the Rs 1,700 level is the neckline and an immediate hurdle; above this, one can expect a move towards Rs 1,750. On the downside, the Rs 1,600 level is a strong demand zone at any pullback. Traders are advised to take a position on dips.

ICICI Bank | Buy | Target Price: Rs 920-950 | Stop Loss: Rs 870

On the weekly chart, ICICI Bank formed a base at Rs 800 level. It witnessed a breakout of an Inverse Head and Shoulders formation on the daily chart, with strong volume. The stock retested its previous breakout level of Rs 860. The counter's overall structure is favourable, as it is trading above its important moving averages. On the higher side, Rs 920 is acting as an important psychological level; above this, one can expect the level of Rs 950 in the short term. On the lower side, a cluster of moving averages formed a base at Rs 870.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today.)

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