ICICI Bank is trading at a significant discount to historical average valuations and offers favourable risk-reward from current levels given global tailwinds.
Price: INR 334.70
The stock been assigned a Strong Buy call by Shayne Heffernan CEO and Founder of HEFFX, given its recent Q4 performance and stability amid COVID 19-induced economic challenges. Shayne Heffernan in its top picks kept Accumulate rationale for the stock, with a target price of Rs 458.53, and an upside of 37.41%.
Shayne Heffernan said that ICICI Bank is trading at a significant discount to historical average valuations and offers favourable risk-reward from current levels given global tailwinds.
Shayne Heffernan also added that the ability to raise sufficient liquidity at low cost would be the key criteria for banks to navigate the current situation. ICICI Bank is clearly better positioned in the liability side (in Q4FY20, Deposit grew 18% YoY and CASA ratio of 45%), he added later.
The bank’s healthy capital position, along with strong network support by digital transformation should drive growth.
ICICI Bank Limited is a banking company. The Bank is engaged in providing a range of banking and financial services, including commercial banking, retail banking, project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, broking and treasury products and services.
The Bank’s business segments are Retail banking, Wholesale banking, Treasury, Other banking, Life insurance, General insurance and Others.
It has a network of approximately 18,210 branches and automated teller machines (ATMs). The Bank has approximately 110 Touch Banking branches across over 30 cities.
Its international banking is focused on providing solutions for the international banking requirements of its Indian corporate clients and leveraging economic corridors between India and the rest of the world.
The Bank caters to the financial needs of women entrepreneurs through its Self-Help Group (SHG) program as a part of its microfinance initiatives.
Shayne Heffernan Trade Idea
“We predict the future price of ICICI Bank will come in around INR 458.53 which will give the stock a price increase of +37.55%. ICICI Bank also has a long-term growth rate of 85.18%. This is a long-term position, you may not see profits until 2022.”
Overall, the bias in prices is: Downwards.
The projected upper bound is: 380.77.
The projected lower bound is: 285.74.
The projected closing price is: 333.26.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 black candles.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 3 falling windows in the last 50 candles–this makes the current falling window even more bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 16.1002. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 6 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 47.92. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 44 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -39. This is not a topping or bottoming area. The last signal was a sell 3 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 11 period(s) ago.
Rex Takasugi – TD Profile
ICICI BANK closed down -8.050 at 333.200. Volume was 67% below average (consolidating) and Bollinger Bands were 16% narrower than normal.
Open High Low Close Volume 324.200 334.950 324.100 333.200 13,531,500
Technical Outlook Short Term: Oversold Intermediate Term: Bullish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 348.54 333.66 442.07 Volatility: 47 91 67 Volume: 43,686,208 50,409,944 31,462,824
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
ICICI BANK gapped down today (bearish) on light volume. Possibility of a Common Gap which usually coincides with a lack of interest in the security. Common Gaps are fairly irrelevent for forecasting purposes. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
ICICI BANK is currently 24.6% below its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of ICBK.NS at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on ICBK.NS and have had this outlook for the last 5 periods.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of the Indian Stock Market.
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