The private sector bank has slipped from Rs 2,252 recorded on 27 October 2021 to Rs 1,845 on 8 June 2022. The stock has shown resilience when compared to Nifty50 in the past few weeks.
Traders holding the stock can maintain their positions while fresh money can be deployed now or on dips for a target of Rs 2,110 in the next 1-2 months, suggest experts.
The 200-days EMA on the weekly chart supported the stock price multiple times in the month of May. Hence, as long as the stock holds above this long-term moving average – the broader trend should be on the upside.
In the near term, the stock is finding support near the Rs 1,700-1,800 levels on the weekly charts. It is trading above the 50-DMA placed at Rs 1,800 but below the 200-DMA placed at Rs 1,872 on the daily charts.
The Bank Nifty has shown resilience during the recent corrective phase. The Nifty Bank has fallen more than 1 per cent so far in 2022 while Kotak Mahindra Bank has risen nearly 3 per cent in the same period.
Within the banking space, Kotak Mahindra Bank has been an outlier as it logged a range breakout from the ratio line of Kotak Mahindra Bank/Bank Nifty, suggest experts.
“On the price chart, it recorded breakout from contracting triangle placed at key support of 52-weeks EMA, thereby offering fresh entry opportunity with favorable risk-reward set up,” Dharmesh Shah, Head – Technical, ICICI direct said in a note.
“The stock has formed a strong base formation in the vicinity of earlier resistance zone of Rs 1,700 which is now acting as strong support as per the change of polarity concept,” he added.
Shah expects the stock to accelerate upwards and gradually head towards Rs 2,110 levels in the coming months as it is the 80% retracement of the October 2021 – March 2022 decline (Rs 2253-1672) coinciding with the November 2021 high.
On the oscillator front, weekly MACD generated bullish crossover and is set to resolve above zero line that would fuel the next leg of up move. MACD is above its center line, but below the signal line.