After an 8% fall last week, shares of HDFC Bank could see buying sentiment picking up, but any sustained recovery is likely to be limited, it said Anand JamesChief market strategist Geojit Financial Services.
“Last week’s decline has dwarfed the rise of the last three weeks and highlighted the bearish undercurrents that may indicate an extended bear phase that may not subside until Rs 1322 is reached. Alternatively, expect this view to be challenged if upside moves unsettle the region between Rs 1544 and Rs 1555,” he says. Edited excerpts:
Driven by the downtrend in bank stocks, Nifty ended the week down around 2%. Are you seeing any green signs in Friday’s purchases? How difficult is it for bulls to hold the 20,000 mark?
As Friday extends the week’s losses, we are within touching distance of the 19,550 target set early last week. The proximity of the 50-day SMA at 19626 lends credence to the prospects of a break in the week-long downtrend or possibly a reversal move that could target 19956-80 as the initial target. Alternatively, the inability to hover above 19,600 or retake the 20,030 level in the recovery could signal a resumption of the downtrend targeting 18,600. The prospects for this are slim, but still a possibility.
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How to read the different signals of Nifty Bank and Nifty PSU Bank index? The PSU banking index is on its way to all-time highs. Best to avoid private banks now?
This divergence arose for two main reasons. Firstly, PSU banks are on the rise due to reports of India’s inclusion in JP Morgan’s Government Bond Index and secondly, Nifty Bank is in decline, particularly due to the crash of HDFC Bank. The relative outperformance of PSU banks comes after a long period of lagging behind. While this has put private banks in distress, the sector as such has not fallen out of favor. In fact, HDFC Bank and ICICI Banks were the only losers on Friday among private banking index constituents, which appear to be well-positioned and worthy of fresh investments.
HDFC Bank fell for the fourth consecutive day on Friday. Do you think it would be wise to buy on this dip and that the counter could be in oversold territory?
The pace and depth of the recent decline could mobilize bargain hunters early next week, a situation also supported by the positive divergence of some oscillators. However, the prospects of such a recovery rally developing into a sustained uptrend appear limited at this point. In fact, last week’s decline has dwarfed the rise of the past three weeks and highlighted bearish undercurrents that may indicate an extended bear phase that may not subside until 1322. Alternatively, expect this view to be challenged if upward moves unsettle the 1544-1555 region.
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ELECON (CMP: 719)
Entry area : 720 – 713
Goals: 760 – 790
Stop loss: 680The stock has been in correction mode since the beginning of this month, declining near the Fibonacci 61.8% June 2023 low and September 2023 high. A Doji candle forms on the daily timeframe near the 100-day moving average and provides strong support. Additionally, the MACD forest has shown signs of exhaustion at lower levels, confirming our expectation of a near-term decline. We expect the stock to move towards 760 and 790 in the next few weeks. All long positions can be protected by stop loss values below 680.
JUSTDIAL (CMP: 708)
View : Buy
Input area: 710 – 702
Goals: 730 – 760
Stop loss: 680
The stock has been in a downtrend since July 2023 and has retraced the Fibonacci rate by 61.8% from the March 2023 low and July 2023 high in the weekly charts. Additionally, a hammer candle near the 100DMA of 686 along with the depletion of the MACD forest on the weekly time frame provides a good opportunity to look for a recovery. We expect the stock to move towards 730 and 760 in the next few weeks. All long positions can be protected by a stop loss below 680.
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Source : economictimes.indiatimes.com