Banking Stocks to Buy: Bank stocks are having a good rally and it doesn’t look like that will end anytime soon. However, the Nifty Bank declined 211 points to 39,456 and formed small bodied bullish candlestick pattern on the daily scale in the last trading session. The important pivot level, which will act as crucial support for the index, is placed at 39,285, followed by 39,115. On the upside, key resistance levels are placed at 39,599 and 39,743 levels, experts said.
On the future outlook for Bank Nifty and important levels that investors should watch out for, Rajesh Palviya, VP – Technical and Derivative Research, Axis Securities, said “On the daily chart, the index has formed a bearish candle with either side long shadows indicating extreme volatility at higher levels. The index is moving in a Higher Top and Higher Bottom formation on the daily chart indicating a short-term up trend. The chart pattern suggests that if Banknifty crosses and sustains above the 39,800 level it would witness buying which would lead the index towards 40,200-40,500 levels.”
“However, if the index breaks below the 39,600 level it would witness selling which would take the index towards 39,400-39,200. Banknifty is trading above 20, 50, 100, and 200-day SMA indicating positive bias in the short to medium term. Banknifty continues to remain in an uptrend in the short term, so buying on dips continues to be our preferred strategy. The daily strength indicator RSI continues to remain flat and is below its reference line indicating the absence of momentum on either side,” he explained.
For the past few quarters, banks have enjoyed healthy credit growth, strong balance sheets, and improving asset quality. Rajesh Palviya, Axis Securities has picked 4 stock recommendations that are well placed to give healthy returns and their moving averages indicate a strong uptrend.
BANK OF BARODA
Stock manages to give breakout above July 2019 swing high and shown “V” shape recovery, Stock is forming series of higher top higher bottom formation on daily and the weekly chart indicates the bullish trend is likely to continue, Chart pattern indicates if stock continues to hold above 126 level then the stock may scale up towards 145 -155 levels, while 126-118 are likely to act as good support levels in minor downside. Stock is well placed above all its important moving averages which indicate a strong uptrend.
FEDERAL BANK
With the August 22 close (117) the stock has decisively broken out of its four years “multiple resistance zone” at 111 levels on a monthly closing basis. Rising volumes on each rally signifies increasing participation. The weekly “band Bollinger” buy signal indicates rising momentum. The stock is in a strong up trend forming a series of higher tops and bottoms indicating bullish sentiments. The stock is well placed above its 20, 50, 100, and 200 -day SMA’s which reconfirms the bullish trend. The short-term support is placed around 110-105 levels and on the other hand, the overhead resistance is around 130-155 levels.
CSB BANK
With the current week’s gains, the stock has decisively broken out its past one year “down sloping trendline ” at 215 levels which signal trend reversal on the short-term chart. Rising volumes near this breakout zone represent increased participation. On the daily and weekly time frame, the stock has confirmed higher tops and bottoms formation which confirms the change of trend. The bullish crossover from 50, and 100- day SMA indicates bullish sentiments. The daily, weekly, and monthly strength indicator RSI is placed positively and sustaining above its reference life indicating rising strength The short-term support is placed around 200-195 levels and on the other hand, the overhead resistance is around 250-270 levels.
DCB BANK
Since Jan 2021, the stock was trending lower with a “down-sloping channel” however in the past couple of weeks huge buying has confirmed a channel breakout at 92 levels. This breakout is accompanied by huge volumes indicating increased participation. The weekly “band Bollinger” buy signal indicates rising momentum. In August the stock recaptured its 20, 50, 100, and 200-day SMA and rebounded very sharply which reconfirms bullish sentiments. The short-term support is placed around 92-90 levels and on the other hand, the overhead resistance is around 120-130 levels.
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