Bank Nifty 6th Nov 2015
Bank Nifty today was trading weak. Last week Bank Nifty after making a high of 18029 started falling and then made a low of 17170 due to this sharp fall and the manner of the fall Bank Nifty charts have been further damaged and now Bank Nifty has a critical support zone at 16700. If Bank Nifty has three closings below 16700 or if price directly breaks 16700 (Bank Nifty Spot Levels Mentioned) with volumes and stays below 16700 even for even one hour the Major medium term trend for Bank Nifty turns down.
Bank Nifty Minor Trend is down and Bank Nifty Major Trend is down but if above mentioned levels are taken out then Bank Nifty Major Medium Term Trend turns down which in simple language means that it will become a sell on rise and we will see significant underperformance versus Nifty 50 at least for the time being.
Private Sector Banks
We have clearly mentioned that this space is a complete avoid however if compulsive exposure needs to be taken it should be in HDFC Bank and Indusind Bank. Both these Banks will outperform Bank Nifty and also Nifty 50 to a certain extent. Axis Bank and Icici Bank look particularly bad on the charts. Both of them have been making classic lower tops and lower bottoms and it is futile exercise to put down side targets for them as Major Trend in both these stocks is down as of today and it never pays to bottom fish in such stocks which are at such high elevated valuations. Money will always be made buying high quality stocks cheap. Money never has been made nor will be made by buying at steep valuations and we don’t see value in Axis Bank or Icici Bank at this juncture. Axis Bank in particular made a double top at around 532 and until that are is taken out or on the lower side we reach 378 we do not recommend even considering the stock. Massive structural problems in Axis Bank and Icici Bank will soon begin coming out in public domain.
Public Sector Banking
This space has been far more badly managed than the Private sector bank space and we maintain our recommendation to skip this space totally. From the institutional side of there is compulsion to have exposure to this sector then we will have to go with State Bank of India. The basic problem of asset quality, low growth continues to haunt these banks balance sheets and it will only get more aggravated as per our analysis.
Mobile wallet has indeed taken the banking space especially in India by a storm. The senior management of most banks were skeptical about mobile wallet as a technology and its uses. Anyways now most banks are reacting to the completion like Pay TM which is rapidly increasing their no of active customers and it will surly impact retail banking business of all banks. It is a matter of when not if. More details on mobile wallet will be given in a later post.
Good Trading To You!