ICICIdirect recommends buying Axis Bank in the range of Rs 1,935-1,920 for target of Rs 2,180 with stop loss of Rs 1,820 on a closing basis.
Commenting on the rationale, the stock broker said, "The share price of Axis Bank participated in an astounding rally off February 2014 lows (Rs 1,098). It got a further shot in the arm during May 2014 ahead of General Election results, when the share price cleared through its 2010 and 2013 peaks around Rs 1,600. The stock went on to record a life-time high of Rs 1,989 during early June 2014. The strong breakout during May 2014 reinforced the long term bull trend for the stock propelling it to higher orbits.
More recently, in June 2014, the share price went into a secondary correction, which saw the stock price retracing its May 2014 rally (Rs 1,516-1,989) precisely by 50%. More significantly, it also held above the rising gap area of May 16, 2014 (General Election result day) placed at Rs 1,684-1,664, only to make a strong rebound. Time wise, against a 23 day advance, the share price has already consumed 18 sessions retracing the same only by 50%. Such price/time behaviour of shallow price corrections consuming almost equal time taken by the rally, highlight the underlying strength in the positive trend and overall positive price structure.
A closer look at the daily time interval chart reveals the share price has been largely oscillating in the range of Rs 1,990-1,800 over the last five weeks. Considering the overall positive structure, we expect the share price to break past this consolidation and rally towards Rs 2,180 in the medium term being the consolidation range (Rs 1990-1800=190 points) as projected from the current life-time high of Rs 1990 (1990+190=2180). This also coincides with the key Fibonacci price extension target as the 138.2% extension of the last rising segment (Rs1,650 to Rs1,950) measured from the recent swing low of Rs 1,760 is placed around 2,175 levels, making this a key near term target for the stock.
Among momentum indicators, the 14-day RSI has worked off its overbought status helped by the corrective decline and now generated a positive crossover above its nine-period average within the positive territory. This further highlights the overall positive bias in the stock.''
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