HDFC Bank (Ticker — HDFCBank)
Stock is underperforming the benchmark nifty index and banknifty index as well.
Market Structure
The weekly chart has turned bearish after the break of the October 2023 low. Currently at 200MA on the weekly chart. The next good support in stock comes around the 1270 level, From where the price made a high. So better to wait and add more near the same level.
Moving Averages
On the weekly chart, the price has gone below all MAs (20, 50 & 200), Indicates a bearishness. On the day chart as well price is below all MAs, so before accumulating a stock we need to be careful that we don’t buy too high.
On the day chart also price is trading below all MAs. So until we see the price moving above 200MA we can’t say a stock is in a bullish trend, Even though it’s everyone’s favorite “HDFCBank”. You need to be unbiased with technicals.
RSI (Relative Strength Index)
RSI on the weekly chart has gone below the 40 level. So it’s a clear indication of bearish strength. So until RSI goes above 60–70 and sustains there I can’t be so bullish on stock.
Fibonacci Levels
From May 2020 (Price 800) to High’s July 2023 (Price 1700) price has almost corrected 40% as of now, 50% of the correction comes to around 1270 from where the price took support in June 2022 and gave a high of 1700.
I have shared 3 levels of good demand zones from where I will be building more positions in the stock. My goal will be adding more towards downside so on top levels I will add less like 20% — 30% and 50% at the last level to downgrade my average a lot.
Poing & Figure Chart
The P&F chart is bearish. That’s enough explanation LOL.
Fundamental Analysis
The PE ratio of the stock is very lucrative, trading at a 5–year low.
The company is reporting excellent net profit every quarter. It’s almost doubled from 2020.
Net profits have skyrocketed, the company reported the highest-ever annual profits last year and is expected to break record growth this year as well.
Interesting to observe is that FIIs have increased their holdings quite a lot in Sep 2023 and Dec 2023 and DIIs are continuing their buying spree on stock, increasing their holdings every quarter.
So the stock is fundamentally very strong and technically weak so I am keeping fundamentals in the back of my mind to build position slowly and once technicals give good structure I will buy aggressively for the long term.
