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Synopsis: Indian stock markets have started the week with gains, driven by positive global cues from the recent US Federal Reserve rate cuts. Among the spotlighted stocks, ICICI Bank is seen as overextended, leading analysts to recommend caution and profit booking.
Indian markets started the week on a high note, boosted by favourable global factors following last week's US Federal Reserve rate cuts. The BSE Sensex surged by 384.30 points or 0.45%, closing at 84,928.61, while the NSE Nifty50 rose by 148.10 points or 0.57%, ending the day at 25,939.05. Among the stocks in focus are large-cap banking giants like ICICI Bank, HDFC Bank, and Kotak Mahindra Bank. Traders are keenly watching their movements as they navigate market volatility.
ICICI Bank – A Stock to Avoid for Now
Currently, ICICI Bank is considered overextended, as it trades significantly above key exponential moving averages (EMAs) like the 20, 50, 100, and 200-day EMAs. This suggests that the stock's price has moved well beyond its usual trend, increasing the likelihood of a mean reversion, where prices pull back to align more closely with average levels. The sharp rise heightens the risk of a correction, making it advisable for investors to avoid new long positions. For those holding ICICI Bank stock, experts recommend booking profits in the range of ?1,320-?1,340.
Kotak Mahindra Bank – A Buying Opportunity
Kotak Mahindra Bank recently broke a bearish trendline on its weekly chart, signaling a potential shift in market sentiment. After retesting this trendline, the stock bounced back, confirming it as a new support level. Kotak Mahindra Bank is showing strong technical signs of continued upward movement, adhering to the 200-day Exponential Moving Average (DEMA) High-Low band on the daily chart. However, given the stock's recent 180-point rally, a cautious approach is advised. Analysts recommend buying Kotak Bank within the ?1,910-?1,890 range, targeting an upside of ?2,050, with a stop-loss at ?1,825 to manage risks effectively.
HDFC Bank – Time to Book Profits
HDFC Bank has experienced a notable rally, gaining nearly ?170 in the past month, translating to a 10-11% increase. While this surge pushed the stock above key EMAs, it has also reached a potential resistance zone between ?1,775-?1,800, a level where the stock has historically faced selling pressure. Given this context, investors are advised to avoid new long positions and instead consider booking profits in this price range, rather than chasing further gains in what could be an overextended market scenario.
Analyst Insights on Banking Stocks
According to Jigar S Patel, Senior Manager of Technical Research at Anand Rathi Shares and Stock Brokers, the key banking stocks – ICICI Bank, HDFC Bank, and Kotak Mahindra Bank – each offer different opportunities based on technical indicators. While Kotak Mahindra Bank presents a buying opportunity, ICICI Bank and HDFC Bank show signs of potential pullbacks, warranting caution.
Disclaimer : This analysis is based on technical indicators and market trends. Stock market investments are subject to market risks. It is recommended to consult a financial advisor before making any investment decisions.
