Technical Analysis

Stock query: ICICI Bank in consolidation phase

Yoganand D | Updated on May 31, 2020 Published on May 31, 2020

The stock faces a key resistance ahead at ₹350

Here are the answers to readers’ queries on the performance of their stock holdings.

I would like to buy shares of ICICI Bank. Kindly suggest the supports and resistances.

TVS Prakash Rao

ICICI Bank (₹332.1): The stock of ICICI Bank witnessed a sharp fall in early March.

But the stock found support, registering a 52-week low at ₹269 levels, in mid-March and started to move sideways.

Since then, it has been in a sideways consolidation phase in a wide range between ₹285 and ₹380. Recently, the stock tested the lower boundary and started to trend upwards.

Last week it gained 14 per cent, experiencing buying interest.

The stock currently tests its 21- and 50-day moving averages and faces a key resistance ahead at ₹350. A strong break above this level can take it higher to the upper boundary which is at ₹380.

A break above ₹380 will strengthen the bullish momentum and take the stock higher to ₹410 and ₹440 levels in the medium term.

As long as the stock trades below ₹440, the intermediate-term downtrend that had commenced from the February high of ₹550 will remain in place. An emphatic breach of ₹440 will alter the downtrend and take the stock northwards to ₹476 and then to ₹500 in the long run.

On the other hand, if the stock fails to move beyond ₹380, it will continue to trade sideways for a while. A plunge below ₹285 will bring back selling pressure and pull the stock down to ₹270 and then to ₹250 over the medium term. Investors with a long-term view can buy in declines with a long-term stop-loss at ₹280.

I want to invest in Bank of Baroda and Mahindra & Mahindra Financial Services. Please let me know the medium- to long-term technicals.

Yerava Suneeta

Bank of Baroda (₹38.9): The stock is in a downtrend across all-time frames — short, medium and long term. In February, the stock breached a key long-term support at ₹85 and continued to trend downwards.

Since then, it has been in an intermediate-term downtrend.

However, it marked a multi-year low at ₹36 recently, and trades just above this level.

Both the daily and the weekly relative strength index display positive divergence, implying potential trend-reversal.

A break above the short-term resistance level of ₹50 can confirm the reversal and take the stock higher to ₹65 and then to ₹75.

The subsequent long-term resistances are at ₹85 and ₹100.

The long-term downtrend will remain in place as long as the stock trades below ₹130. A slump below the immediate base level of ₹36 can pull the stock down to ₹33 and ₹30 in short term.

You can buy above ₹50 with a long-term stop-loss at ₹40.

Mahindra & Mahindra Financial Services (₹139.9):This stock is also in a downtrend across all-time frames. In the week before last, the stock had marked a 52-week low at ₹125.4, and is moving sideways.

It faces a vital resistance at ₹150; a break above this level can take the stock higher to the long-term resistance in the band between ₹180 and ₹190.

Investors should tread with caution as long as the stock trades below ₹190. A conclusive break of this zone can take the stock higher to ₹250 and then to ₹300 over the medium term.

But, a tumble below ₹125 can reinforce the downtrend and drag the stock down to ₹115 and ₹100.

Send your queries to techtrail@thehindu.co.in

Published on May 31, 2020
This article is closed for comments.
Please Email the Editor