Chartist Talks: Sudeep Shah of SBI Securities believes Axis Bank has bottomed out, sees bullish momentum in this stock

Sudeep Shah is the Head of Technical and Derivative Research at SBI Securities

Sudeep Shah of SBI Securities believes Axis Bank has bottomed out for now. "The stock has given a neckline breakout of Adam and Adam Double Bottom pattern on a daily scale. This breakout is confirmed by robust volume, and the stock has surged above its short and long-term moving averages, which is a bullish sign," he reasoned.

He is bullish on Bombay Dyeing as the momentum indicators and oscillators are suggesting strong bullish momentum in the stock. Hence, "we recommend to accumulate the stock," said the Head of Technical and Derivative Research at SBI Securities. He has more than 17 years of experience in the technicals and F&O.

According to him, given the technical weakness, FMCG and Auto sectors are likely to underperform in the near term.

In line with our expectations, during the first half of last week, both the Nifty Mid Cap 100 and Nifty Small Cap 100 significantly outperformed the frontline indices. However, selling pressure emerged on Thursday across both the frontline and broader markets. Notably, on Friday, the Nifty 50 briefly slipped below the neckline of a Head and Shoulders pattern on an intraday basis, but managed to close above it by the session’s end.

Friday's recovery was largely driven by strong contributions from the banking and financial services sectors, with the Bank Nifty outperforming the frontline indices for the week.

As for Nifty, Friday’s recovery led to the formation of a High-Wave-like candle for the second consecutive week, reflecting uncertainty and indecision among market participants. This pattern suggests a lack of clear direction, with both buyers and sellers struggling for control. As a result, we may see a period of consolidation in the near term.

Talking about level, the zone of 24,550-24,500 will act as immediate support for the index. Any sustainable move below the level of 24,500 will lead to sharp selling pressure upto the level of 24,100 in the short-term. While, on the upside, the 50-day EMA (Exponential Moving Average) zone of 25,000-25,050 will act as an immediate hurdle for the index.

The Bank Nifty has strongly outperformed frontline indices in the last week as it has surged by nearly 2 percent. Also, it has formed a bullish candle on a weekly scale. Most noteworthy, the ratio chart of Bank Nifty as compared to Nifty has given a consolidation breakout, signaling clear outperformance.

Along with this rise, the Bank Nifty has surged above its 20 and 50-day EMA level. These averages have started edging higher. Further, the daily RSI (Relative Strength Index) has given a bullish crossover and it is in a rising mode. These technical factors are suggesting that the index is poised to extend its upward momentum in the coming sessions.

Talking about levels, the zone of 52,300-52,400 will act as immediate hurdle for the index as 50 percent Fibonacci retracement level of its prior downward rally (54,467-50,194) is placed in that region. Any sustainable move above the level of 52,400 will lead to sharp upside rally upto the level of 53,000, followed by 53,600 in the short-term. On the downside, the 100-day EMA zone of 51,150-51,050 will act as crucial support for the index. If the index slips below the level of 51,050 will lead to resume its southward journey.

Has Axis Bank bottomed out?

Yes, On Friday, the stock of Axis Bank has given a neckline breakout of Adam and Adam Double Bottom pattern on a daily scale. This breakout is confirmed by robust volume. In addition, it has formed a sizeable bullish candle on breakout bar, which adds strength to the breakout.

Along with this breakout, the stock has surged above its short and long-term moving averages, which is a bullish sign. Further, the 20 and 50-day EMA started edging higher. The daily RSI has given a bullish crossover.

Hence, we believe, the Axis Bank has bottomed out for now. As per the measure rule of Double Bottom pattern, the upside target is placed at Rs 1,251 level. On the downside, the zone of Rs 1,170-1,160 is likely to provide cushion in case of any immediate decline.

National Aluminium Company

The stock has given a consolidation breakout on a daily scale. This breakout is confirmed by robust volume. As the stock is trading at all-time high, all the moving averages and momentum-based indicators are suggesting strong bullish momentum in the stock. The daily RSI is in super bullish zone as per RSI range shift rules. Hence, we recommend to accumulate the stock in the zone of Rs 233-230 level with the stop-loss of Rs 224. On the upside, it is likely to test the level of Rs 245, followed by Rs 252 in the short-term.

Bombay Dyeing

On a weekly scale, the stock has given a Cup pattern breakout along with robust volume. In addition, it has formed a sizeable bullish candle on a weekly scale. The momentum indicators and oscillators are also suggesting strong bullish momentum in the stock. Hence, we recommend to accumulate the stock in the zone of Rs 250-248 level with the stoploss of Rs 241. On the upside, it is likely to test the level of Rs 261, followed by Rs 270 in the short-term.

Both Nifty FMCG and Nifty AUTO are currently in a strong downtrend, trading below their 20, 50, and 100-day EMA levels. These moving averages are in a declining mode, indicating persistent bearish sentiment. Additionally, momentum indicators and oscillators for both sectors point towards continued negative momentum, reinforcing the bearish outlook.

Given this technical weakness, we believe these sectors are likely to underperform in the near term.

Your take on Zomato?

The stock has formed a Bearish Engulfing candlestick pattern on September 24, 2024 and thereafter it has started witnessing correction. During this period of correction, it has slipped below its short-term 20 and 50-day EMA level. These averages are started edging lower, which is a bearish sign. Further, the daily RSI is also slipped below its 40 mark and it is in a falling mode.

Going ahead, the zone of Rs 243-241 will act as immediate support for the stock as it is the confluence of 100-day EMA and prior swing low. On the upside, the 20-day EMA zone of Rs 273-275 will act as an immediate hurdle for the stock.