SBI, HDFC Bank: How to trade banking stks post SC's loan moratorium verdict

Major banking stocks have broken crucial supports

Bank stocks were in focus at the bourses on Tuesday, with the Nifty PSU Bank rallying as much as 3.6 per cent in intra-day, after the Supreme Court rejected the pleas from various trade associations and corporate bodies to extend the six-month loan moratorium period offered by the Reserve Bank of India (RBI), adding that a complete waiver of interest during the moratorium cannot be granted either.

The SC said that no direction can be issued to the government or RBI to announce any particular financial packages or reliefs, and held that it cannot issue directions to provide relief to particular sectors over and above others.

However, the index partially pared gains as the apex court directed that there shall be no interest on interest or penal interest on any amount during the loan moratorium from any borrower.

Against this backdrop, analysts read the verdict as a mixed bag for the sector. While they believe the Court’s ruling to refund/adjust the compound interest may dent the banks’ earnings in the short-term, the long-term growth outlook, they say, remains intact. READ MORE

Here's how some bank stocks and the Nifty Bank index look on charts

BANKNIFTY:  The index has broken below its 50-day moving average (DMA), currently placed at 34,390 levels. Until the index conquers this resistance, the upside bias may remain muddled. The next resistance comes at Rs 34,900 levels. Nevertheless, until the index holds above 33,000 levels, the upside breakout above the 50-DMA may see an added interest of market participants, as per the daily chart. CLICK HERE FOR THE CHART

 
State Bank of India (SBIN):  The formation of the 'Inverse Head and Shoulder' indicates weak sentiment for the counter, below Rs 385 levels. However, until the counter trades above 50-DMA, currently placed at Rs 358 levels, the upside bias may see some recovery in coming days. The immediate resistance comes at Rs 378- 380 levels. Upon crossing this range, the recovery may see a rally towards Rs 400 mark. CLICK HERE FOR THE CHART
 
HDFC Bank Limited (HDFCBANK): After breaching the 50-DMA, the counter is now testing the support of 100-DMA, placed at Rs 1,452 levels. Herein, the Moving Average Convergence Divergence (MACD) has breached the zero line downward, suggesting a build-up of negative sentiment. If the counter manages to cross Rs 1,526, which is its 50-DMA, the upside rally may move towards Rs 1,600 levels, as per the daily chart. CLICK HERE FOR THE CHART
 
Axis Bank Ltd (AXISBANK):  The counter is hovering near the support of 50-DMA placed at Rs 719 levels. If it shows a reversal near this support, then the upside bias may see an uptick towards Rs 775 mark, which is the next resistance level. The Relative Strength Index (RSI) has a resistance of 50 value, which needs to be conquered in order for the stock to gain strength, as per the daily chart. CLICK HERE FOR THE CHART
 
Bank of Baroda (BANKBARODA): The volumes on the recent weakness have remained sluggish, indicating a mild negative trend. However, if the counter breaches the Rs 67 mark, which is its 100-DMA support, then the downside may see an accelerated weakness towards Rs 60 levels. On the higher side, a close above 50-DMA, placed at Rs 78 mark, may see the addition in long outlook, as per the daily chart. CLICK HERE FOR THE CHART
 
ICICI Bank Ltd (ICICIBANK): After a decent consolidation in the range of Rs 645 to Rs 590 levels, the counter has breached the support on the downside. This weakness led the MACD to fall below the zero line suggestive of a negative sentiment. Now, the immediate support comes at Rs 560 levels, the earlier resistance mark. On the higher side, the counter needs to scale Rs 600 levels to regain momentum, as per the daily chart. CLICK HERE FOR THE CHART