Trading strategies for beaten down HDFC twins, bank stocks

HDFC twins, HDFC in particular, may see some more downward pressure; whereas PSU banks like SBI, Canara Bank and BoB can rally up to 9 per cent.

After a one-day euphoria on April 4, the day HDFC-HDFC Bank merger was announced, the Nifty Bank and Financial Services indices have been sliding relentlessly. The Nifty Bank and the Nifty50 indices have shed 5 per cent each since then while the shares of HDFC and HDFC Bank have declined nearly 19 per cent during the period.

Given the sell-off, HDFC Ltd fell out of the elite club of 10 most-valued companies in terms of market capitalisation. With Rs 3.9 trillion m-cap, HDFC now ranks at the eleventh spot. 

Separately, the country's largest lender State Bank of India (SBI) has raised its marginal cost of funds based lending rate (MCLR) by 10 basis points (bps) or 0.1 per cent across all tenures, a move that will lead to an increase in EMIs for borrowers. The lending rate revision by SBI is likely to be followed by other banks in the days to come. READ MORE

Against this backdrop, here's how you could trade related stocks:
 
HDFC Bank Limited (HDFCBANK)
Outlook: Needs to hold significant support

If the shares of HDFC Bank fail to hold the support of Rs 1,350 on the daily scale, the negative bias could see the stock heading towards the Rs 1,247 , its 200-weeekly moving average (WMA). The present scenario implies aggravated selling pressure and if near supports get violated, the weakness may see build of bearish positions, according to the daily and weekly charts. CLICK HERE FOR THE CHART
 
Housing Development Finance Corporation Ltd (HDFC)
Likely target: Rs 2,000 ( sustaining closing below 200-WMA)
Downside potential:  7%

The shares of Housing Development Finance Corporation breached its major support at Rs 2,250, shows the daily chart. Now, as it slips under the 200-WMA as well, set at Rs 2,176, the selling pressure could see added aggression. Further weakness on closing basis or sustaining below 200-WMA hints at a further decline towards Rs 2,000-mark. CLICK HERE FOR THE CHART
 
Axis Bank Ltd (AXISBANK)
Likely target: Rs 866 (after crossing Russia-Ukraine reversal mark)
Upside potential:  6%

Axis Bank hit an intra-day high of Rs 814,25 on Tuesday, thus managing to reach the near bearish reversal mark of Rs 815.95, touched at the beginning of Russia –Ukraine war. If this hurdle gets overcome, the fresh breakout could instil additional strength resulting in higher levels of Rs 866, its next crucial obstacle, shows the daily chart. The immediate support for the stock exists at Rs 790, followed by Rs 770 level. The Moving Average Convergence Divergence (MACD) comfortably trades above the zero line, suggesting a positive momentum.  CLICK HERE FOR THE CHART
  
Bank of Baroda (BANKBARODA)
Likely target: Rs 135 (breakout above Rs 123)
Upside potential: 9%

After hitting a new 52-week high of Rs 122.70 in the few past sessions, the stock is witnessing selling pressure under Rs 118 level. The immediate support for the stock falls at Rs 110, its breakout mark for the “Inverse Head and Shoulder “pattern, according to the daily chart. A breakout above Rs 123 might see higher levels of Rs 135. CLICK HERE FOR THE CHART

State Bank of India (SBIN)
Likely target: Rs 550 (after crossing Rs 523)
Upside potential: 5.50%

Shares of State Bank of India are witnessing some selling pressure near the range of Rs 523 to Rs 522. As and when the stock overcomes this range, the breakout could see rally towards Rs 550, indicates the daily chart. The overall trend is positive above the support of Rs 500-mark. The trend looks optimistic as the MACD firmly trades above the zero line.  CLICK HERE FOR THE CHART

Canara Bank (CANBK)
Likely target: Rs 272.80 (after crossing Rs 253)
Upside potential: 7.50%

Canara Bank shares have witnssed a “Golden Cross” formation on the weekly chart. A breakout above Rs 253 could see the medium-term trend offering a rally to the 52-week high of Rs 272.80. The present support for the stock exists at Rs 230 and Rs 222, suggests the daily chart. CLICK HERE FOR THE CHART