Axis Bank - Advance Indicator

Axis Bank is a high beta stock. The stock has been outperforming the market for last 2-3 years. It is one of the favourite stocks of the institutional investors and provides good trading opportunity for traders also. The stock witnessed a spectacular run in last four and half months. Price increased 53% in this period, which is fabulous in any parameter.   

The scenario is quite different in last 3-4 trading sessions. Axis Bank fell almost 7% in this period comparing to fall of 2.6% and 1% in Bank Nifty and Nifty respectively. Whether this weakness is stock specific or warning sign for the overall market, we do not know. Only time has that answer BUT the chart of Axis Bank deserves a closer look on both academic and trading perspective. The chart is given below.

It is evident from the chart that today’s low of 535 is a crucial sp for Axis Bank. Price may bounce back from here but need to cross 550-552 for strength. Decisive break below 535 will signal further weakness and retesting of earlier low 492 cannot be ruled out in that case.

As of now it seems that we have the following probabilities.

1. This is a shallow correction. Price will eventually cross the earlier high 577.
2. There could be a mild bounce back till 550-552 zone and then price breaks 535 to test 492.
3. Price does not bounce back, breaks 535 and heads towards 492.
4. None of the above.

The last option is given to make this article ‘politically correct’. In our opinion, it has to be among the first three scenarios with more chance of a downward breakdown. In any case, 535 is the key level for Axis Bank. We will keep close eye on this stock.

Disclaimer - The views here expressed and the charts shared are strictly for educational purpose and not a guideline for buy or sell. The author will not be responsible for any loss, that may occur.