Stock prices speak louder than words. In last 2-3 days when entire market collapsed from 4850 to 4550 - here’s one stock that has stood the decline by holding on to an important support level of 100 dma. The reason: good results + Institutional bullishness.
ICICI Bank = Holding 100 dma
The chart below clearly tells us that how ICICI Bank has been braving the bearish storm. It means if market recovers, this will be first stock to give the most decent bounce.
Source: ChartAlert [www.chartalert.com]
Technically, the stock is ripe for bounce atleast to 850 levels in near term. But no stock can survive continues bear hammering at the index level. It means this is the best stock to play for bounce but all bets will be off if stock breaks 770 levels on downside because of broader market condition.
ICICI Bank: 5 day Chart
The 5-day chart reveals an interesting picture. The resistance seems well defined around 820-824 whereas strong support exists around 770-780. Breakout traders can watch for breakout above 820-825 for target of 860.
Source: ChartAlert [www.chartalert.com]
Fundamental Support
Post Q2 earnings, research houses have turned very bullish on the stock. The rationale - Bank is doing everything right to improve the quality of Balance Sheet and is preparing itself for good quality growth in coming quarters. Merrill Lynch has come out with target price of 1050 on the stock. The valuation is based on Sum of Parts.
Strategy: One can look to buy the stock with stop loss below 770. Having said that - there is enormous market risk at current juncture, so stop loss should be exercised.
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