The Two Stocks That are Controlling Bank Nifty’s Fate
Of late, the has been in a state of flux, and the two names that have contributed to the weakness are HDFC Bank (NS:) and Kotak Mahindra Bank (NS:). This is as these two have reached a major crossroads and are trading at critical support zones. Thus, I will cover them today as this makes them an interesting topic of analysis.
Starting with HDFC Bank. The stock has been performing poorly since the beginning of 2023, as all attempts of an up move have failed at the 1,720 resistance zone. This has resulted in the stock falling to its major support zone of 1,600. While various scenarios can play out in the long term, here I will focus only on the short-term outlook.
Now in the short term, I believe HDFC Bank is on the heels of a dead cat bounce that will utilize my quant support zone at 1,570 as a base. However, I expect the bounce to be short-lived as I don’t believe it will be able to break above the resistance zone between 1,620 and 1,640. Once it reaches this point, it most probably will begin a fresh descent. Thus, in the coming sessions, you can expect a small dip towards 1,570, after which we may begin the dead cat bounce. However, investors should avoid any medium-term buys until it clears the resistance at 1,640. This is all up moves until then will be short-term plays.
Moving on to Kotak Mahindra Bank, its price performance has been a big fat zero since January 2021. This is because it has been stuck within a multi-year box range that has caused it to severely underperform when compared to its peers. However, the reason I chose to cover the stock is as it has reached the lower end of the box range as it is trading at Rs. 1,697.
Now, for the coming weeks, I expect the stock to utilize the support zone between 1,660 and 1,680 as a temporary base. This in turn will cause the equity to enter a tighter consolidation zone that can trigger a small dead cat bounce towards 1,740. Hence, I expect the consolidation zone to form a range between 1,660 to 1,740 for the next few sessions. But, if it were to break 1,660, then the stock will enter the severe bearish territory in the weekly timeframe. For the longer-term picture, I will share a video on equity via my Twitter handle. I am doing so as the stock is at a critical zone that could either earn investors a fortune or rob them of one.
In conclusion, the Bank is going through a period of uncertainty, and stocks like HDFC Bank and Kotak Mahindra are currently crucial for it. Thus, I expect these two names to play a major role in deciding how the index will trade this week. On the whole, these two stocks, with their probable dead cat bounces, will favor derivative traders in the coming weeks. This is because they will give us quick in and outs via futures and option buys.
Disclaimer: The investments discussed by Sandeep Singh Ahluwalia may not be suitable for all investors. Thus, you must trust your analysis and judgment before making investment decisions. The report provided is for informational purposes only and should not be interpreted as a proposition to buy or sell any securities.