ICICI Bank shares set to rally in coming days? History suggests so

ICICI Bank Ltd has seen a strong positive seasonality in Octobers, as the scrip settled higher in nine of past 10 occasions and delivered an average 8 per cent return for the month. In comparison to NSE200 weights, mutual funds are underweight on the stock, said Neeraj Agarwal, Technical & Alternative Research at JM Financial, as he sees the stock hitting Rs 1,380 mark in coming days.

The ICICI Bank stock is down 3 per cent in October so far. The private lender is scheduled to announce its September quarter results on October 26. On Friday, the scrip was trading 0.66 per cent lower at Rs 1,235. Technically, in the last 1 year, the stock has never closed below its 100-day EMA level, which is currently placed at Rs 1,205 levels.

Short coverings are likely to creep in, Agarwal said.

Recently, the stock has declined from a high of Rs 1,362 levels to a low of Rs 1,225 level in the last 13 sessions. It has started consolidating near its 50-day EMA levels in the ongoing week. On technical charts, ICICI Bank is forming a bullish pattern of higher top higher bottom, which would get negated on a close below Rs 1,153 level.

Axis Securities expects the bank to report 6.7 per cent YoY rise in net profit at Rs 10,945 crore for the September quarter from Rs 10,261 crore in the same quarter last year on higher provisions. Net interest margin is seen growing 9.6 per cent YoY to Rs 20,060 crore from 18,308 crore. Provisions are seen more than doubling to Rs 1,410 crore from Rs 583 crore YoY.

"Margins are expected to remain stable with a slight negative bias. Healthy fee income and largely stable cost ratios may support PPoP. Credit costs will remain under control, no major challenges on asset quality likely," the domestic brokerage said.

On the F&O side, the cumulative futures open interest in the current series has increased 43 per cent. With most accumulation on the short side -- as evident from a decline in the cost of carry and the steep fall in the stock price, any bounce up is likely to trigger a round of short covering, Agarwal.
In the past three months basis, the stock has underperformed Nifty by 2 per cent.

Agarwal sees the stock at Rs 1,380 and suggested traders to keep a stop loss below Rs 1,178 level on a closing basis.