Charts flash bullish signal for ICICI Bank; more pain for HUL. Here's why

ICICI Bank is trading firmly in overbought condition, while Hindustan Unilever is still not showing signs of any reversal depsite trading in oversold territory

With the results season in full swing, the markets have witnessed significant movement in stocks of the companies that declared earnings. Market participants have been quick to latch on stocks of the companies that fared well in Q2, while punishing those who dis-appointed the Street. Given the frenzied activity certain stocks reach over-bought levels, while the others trade in over-sold category.

A quick analysis of the Nifty 50 stocks, reveal that ICICI Bank Ltd and Hindustan Unilever are the only two stocks that are currently in either state. The former trades in the overbought category, while the latter trades in the oversold zone. Rest of the 48 Nifty stocks are trading in the band of 70-30 of the Relative Strength Index (RSI). Herein, a RSI reading of above 70-value indicates overbought and below 30 is oversold territory.

"RSI is the momentum indicator that determines the intensity of the changes in price to acknowledge the overbought and oversold conditions of any security. This assists traders and investors to make informed decisions on their trading positions and investment largely.  In addition, understanding the underlying strength enables market participants to look for entry and exit points wisely".

Shares of ICICI Bank stand tall in the current market uncertainity given the solid Q2 results. The stock trades firmly in the overbought territory of the RSI, and has been gaining momentum on every healthy correction.

In the current month, ICICI Bank has gained over 15 per cent with every new all-time high witnessing buying and accumulation. Going forward, if the stock sustains above Rs 790, which seems possible as overbought territory has seen bullish triggers on the charts, then the upside bias may head in the direction of Rs 900-level, according to the daily chart.

On the other hand, Hindustan Unilever Ltd continues to drift downwards, unable to find ground in the oversold territory, as fundamentally rising input cost continues to weigh on the company's balance sheet. Despite trading in oversold zone, the stock price has failed to show reversal, and instead have seen strong volumes on the negative side.

For Hindustan Unilever, which recently violated the significant support of Rs 2,500, the trend is yet to gain attention and build a support base. While, the nearest support exists at Rs 2,300 level, until and unless the stock does not see either sideways movement or accumulation, the trend may not see decisive reversal.