Chart Check: This banking stock showing signs of rebound after 15% fall; should you buy?

Axis Bank, part of the S&P BSE Sensex index, has fallen more than 15 per cent from October 2021 highs, but recent price action suggests that bulls are taking control.

The private sector lender hit a 52-week high of Rs 866 on 25 October 2021 but failed to hold on to the momentum. It formed a strong base above Rs 600 levels. The stock closed at Rs 730 on August 3 which translates into a downside of over 15 per cent.

The stock tried to gain momentum but failed to climb above Rs 800-815 levels. The stock retested Rs 800 levels once in February 2022 and then again in April 2022 – making a double top pattern on the daily charts.

The Supertrend indicator – a trend following indicator, on the daily charts signaled a buy last month and since then the trend is largely on the upside.

Tracking the momentum, the stock has risen more than 11 per cent in a month. The Relative Strength Index (RSI) is at 66.6. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed.

MACD is above its center and signal line, this is a bullish indicator.

On the price front, the stock is trading below 5,10-DMA but above the 20,30,50,100 and 200-DMA. The momentum helped the stock to trade above the 50 and 200-DMA in July which is a positive sign for the bulls.

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“The stock had made a double top around Rs 815 in the month of April this year and fell sharply by about 25 per cent to reach towards Rs 615 by mid-June,” Rupak De, Senior Research Analyst at , said.

In the subsequent month, the stock witnessed a decent recovery which led to gain of about 20 per cent from a low of Rs 618. Besides, the price has moved above the previous swing low on the daily chart, which indicates a rising bullish trend.

“The price has moved above 50 per cent retracement level of the previous fall from Rs 815 to Rs 618. The RSI is in a bullish crossover on the daily and weekly chart. The above technical set-up looks good for a strong rally in the price that may lead the price towards the previous swing high of Rs 815 in the next few weeks,” he added.

De further added that on the lower end, crucial support is pegged at Rs 700 which could be the stop loss, below which the stock may fall back into consolidation.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)


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