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HEFFX: ICICI Bank Limited (ICICIBANK.NS) Shayne Heffernan Issues Strong Buy

HEFFX: ICICI Bank Limited (ICICIBANK.NS) Shayne Heffernan Issues Strong Buy

ICICI Bank is trading at a significant discount to historical average valuations and offers favourable risk-reward from current levels given global tailwinds.

ICICI Bank
Ticker: ICICIBANK.NS
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.

Business Summary

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.”

Price Performance

Relative Valuation

Technical Indicators

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.

Candlesticks

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 Indicators

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.

Stochastic Oscillator

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.

MACD

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.

Summary

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.

We invite you to try out any MetaStock product (including Add-Ons) for 30 days. If you are not convinced that it helps you make more accurate, educated trading decisions, just return it to us within the 30 days for a refund of the purchase price. It’s that simple. This policy does not apply to subscriptions.

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.

Trading and investing carries a HIGH LEVEL OF RISK, you could lose some or all of your investment. Trading commodities or any other financial instrument may not be suitable for all traders. Before deciding to trade, you should carefully consider your investment objectives, level of experience, and risk appetite. We accept no liability for any losses or damages you may incur—this means that you alone are responsible for your actions in any trading or investing activities.

Sources:
ICICI Bank Company Website
Thomson Reuters Metastock and Eikon financial tools

HEFFXhttp://www.heffx.com
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

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