HDFC Bank, ICICI Bank: Will Q3 results ease volatility in banking stocks?

HDFC Bank's stock to turn bearish only beneath the support of Rs 1,500

Banking stocks will be in the spotlight ahead of their earning season, particularly when the stock market is going through extreme volatility. HDFC Bank will declare its Q3FY23 results on Saturday, followed by Federal Bank on Monday. 

While the Banking index (Nifty Bank Index) has performed well in Q2FY23 and Q3FY23 by surging 15 per cent and 11 respectively, the present movement is unveiling extreme volatility, without any clear direction. Nifty Bank index logged a historic peak of 44,151 in the Q3FY23, but the sentiment has remained subdued since then. 

Among banking sector, AXIS Bank, Federal Bank, ICICI Bank, and State Bank of India hit new all-time highs in the December ended quarter.

Bank of India delivered one of the highest gains by roaring 83 per cent in its recent times. The top contenders in the Banking index are Punjab National Bank and Bank of Baroda, which rose 54 per cent and 40 per cent, respectively, in Q3FY23.

Shares of banking stocks traded mixed on Friday, with six stocks staying in gains and seven on the losing side. The top gainer is Punjab National Bank, rose 0.50 per cent, while the most losing stock is Bandhan Bank, which tumbled 2 per cent. 

Here’s the technical outlook for banking stocks ahead of Q3FY23 results:-

NIFTYBANK

Outlook: Support of 41,000

The leading index has a support of 41,000 levels, which if decisively broken could see bears capitalize on the rising volatility. The weakness may follow, leading the index towards 39,500 – 39,000 levels. To regain the upward momentum, the index needs to overcome and sustains 42,700-mark, with aggressive chart structure denoting a robust underlying trend. The momentum indicator, Moving Average Convergence Divergence (MACD) has slid beneath the zero line revealing selling pressure to exaggerate if the index breaches key supports. CLICK HERE FOR THE CHART

HDFC Bank Ltd (HDFCBANK)

Likely target: 1,750 (only after crossing Rs 1,650) 

Upside potential: 6%

The present formation on the daily chart demonstrates weakness over Rs 1,650 levels. The stock has made several attempts to take out this hurdle, however the selling pressure continued to stay elevated. This is now leading the stock to gradually lose the upside grip. The crucial support is at Rs 1,500 and only upon resolutely breaking this mark; the broad bullish sentiment could hit a dent. A breakout over Rs 1,650 could mean the stock is set to rally towards a new all-time high of Rs 1,750. CLICK HERE FOR THE CHART

Federal Bank Ltd (FEDERALBNK)

Likely target: Rs 150 (only once Rs 140 is crossed)

Upside potential: 7

Shares of Federal Bank are tussling to break through the barrier of Rs 140, with robust volumes. Until this occurs, the counter could trade on a sluggish note. The immediate closing basis supports are at Rs 130, followed by Rs 120. To breakout on the upside, the stock now needs to cross 138, with a sharp reversal signifying a shift in the underlying trend. A move over Rs 140 could trigger an upside to Rs 155. CLICK HERE FOR THE CHART

Bank of India (BANKINDIA)

Likely target: Rs 105 (a close over Rs 97)

Upside potential: 8%

The recent breakdown in the shares of Bank of India has seen support at the 50-DMA currently placed at Rs 86 levels. Thus, as long as this support is defended, the positive bias could prevail. A decisive close over the 97 could steer an upside to Rs 105. Immediate support exists at Rs 90 levels, as per the daily chart. CLICK HERE FOR THE CHART

ICICI Bank Ltd (ICICIBANK)

Outlook: Range bound trade

While ICICI Bank shares have broken the 50-day moving average (DMA) and 100-DMA set at Rs 908.90 and Rs 898, respectively, suggesting a negative bias, the weakness may uplift only beneath the significant cushion of Rs 830. The next support is at Rs 822, its 200-DMA. A clear negative trend would emerge once the stock negates the 200-DMA support. Until then, the stock could attempt to cross 100-DMA mark.  CLICK HERE FOR THE CHART