What does the merger signal for Bandhan Bank and Gruh Fin on tech chart?

Bandhan Bank on Monday agreed to acquire housing finance firm Gruh Finance through a share swap deal. Under the merger cooperation agreement, shareholders of Gruh Finance will get 568 shares of Bandhan Bank for every 1,000 shares held.

The opening deals on Tuesday indicated negative sentiment for Gruh Finance as the stock was trading over 10 per cent lower after a gap down opening. Even, Bandhan Bank saw a gap down start with the shares falling up to 6 per cent. However, the stock recovered later and was trading above the opening levels of Rs 482.

Bandhan Bank: The stock has formed 'Inverse Head and Shoulder' pattern on the daily chart with a clear breakout at Rs 515. The stock traded well above its 100-day moving average (DMA) on 17th and 18th December 2018, before correcting towards 50-DMA, which is at the current level of Rs 490, as per the daily chart. The weekly chart shows strong support around Rs 400 - Rs 410 on a bigger time frame. The overall trend remains positive and upward till daily chart holds support around Rs 400-Rs 425. A rally again towards Rs 550 may trigger a further upside to Rs 610 and Rs 640, as per the technical chart. 

Gruh Finance: The stock has strong support of Rs 240 levels on daily and weekly time frame. Today, the trading over 10 per cent lower may alter sentiments as volumes are significantly larger than average trades. A breakdown below Rs 240 may lead to Rs 202, its 200-WMA (weekly moving average), chart suggests. The stock was trading well above its 200-DMA till yesterday; however, slipping to the lower side after a gap down affected the support of 50 and 100 moving averages as per the daily chart.