Stock Radar: HDFC Bank likely to find support near pre-Covid peak; buy for target of Rs 1,400: Vaishali Parekh

HDFC Bank Ltd, which fell over 12 per cent in the last year compared to over 6 per cent rise seen in the Nifty50, recently broke below the 50-SMA on weekly charts last month but could bounce back from 200-SMA, which also corresponds to peak recorded in 2019-2020.

The private sector lender, with a market capitalization of more than Rs 7.3 lakh crore, hit a 52-week high of Rs 1,724 in October 2021 but soon lost momentum and breached its crucial 50-SMA placed around Rs 1,500 levels in November 2021.

The stock has been trading below this crucial short-term moving average since then, but experts feel that the stock has entered oversold territory and is also trading near the crucial support level of 200-SMA as well as 2019-2020 peaks, which could add support.

The 200-SMA on weekly charts is placed at Rs 1,258, but before that, Rs 1,290 will be an important support level to watch out for.

Traders can go long in the stock for a short-term target of Rs 1,400 in the next couple of weeks, and a stop loss can be placed below Rs 1,250, suggest experts.

The stock closed at Rs 1,318 on 24 May.

In terms of price action, the stock is trading above the 5,10-DMA, while it is still trading below the 20,50,100 and 200-DMA.

The Relative Strength Index (RSI) is in the mid-range and is heading towards the oversold levels. RSI is 43.7, RSI below 30 is considered oversold, and above 70 is overbought.

“The stock witnessed a decent correction from the peak of Rs 1,722 levels and has recently bottomed out near the crucial support zone of 1,290 levels, which was the peak level of the pre-Covid fall,” Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher Pvt. Ltd said.

“Currently, the weekly chart has indicated the RSI flattening out and with improving bias, we anticipate a further rise in the coming days,” she said.

Parekh suggests investors buy this stock for an upside target of Rs 1,400 and, thereafter, a further move would further strengthen the trend for the next target of Rs 1,500-1,550 levels keeping the stop loss near Rs 1,250.

(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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