Top/Down Take: IndusInd Bank (INDUSINDBK)

Let’s begin with the broader market view whereby we analyze our universe of stocks in Nifty500. Nifty500 has been clocking new all-time highs every passing week with RSI comfortably entering overbought territory, demonstrating strength. The 200-week moving average has been sloping upward suggesting that the uptrend is in place.

Click on chart to enlarge view. 

Following this, we move on to looking at the sector-specific chart, which in this case is Nifty Private Bank. Banks were a little late in joining the party, but are now on their way towards their January 2020 highs.

Looking at the Nifty Private Bank index, we see that the early November breakout proved to be a powerful one with RSI moving into overbought territory and confirming bullish momentum. We’re bullish on this index as long as it remains above 15000, with a potential target of 17800 in the weeks or months ahead.

Next, in order to get a confirmation of the strength of the trend, we compare the sectoral index to the Nifty 100 on a relative basis. As we can see from the chart below, Nifty Private Bank started making higher highs and higher lows over the past six months breaking above long-term resistance. It's also worth noting that RSI is making new recovery highs and approaching overbought territory for the first time in multiple years. All signs of improving momentum.

While on an absolute basis Private Banks are driving the banking sector forward, an improvement is visible on a relative basis too.

Now let’s look at the chart of IndusInd Bank. This bank witnessed a strong move in November, breaking above its previous resistance, with the RSI indicating a positive divergence as it moves towards the overbought zone. The stock can move towards levels of 1250 in the weeks and months ahead as long as it remains above our risk management level of 785.

When we compare the stock on a relative basis to the Private Bank index, a steady rise can be seen in the line chart below post the multi-year support the stock respected during the April correction. With a positive divergence in RSI, growing momentum and strength can be seen.

A comparison of the stock with the frontline index of Nfty50 too suggests bullish sentiment as the indicator moved above its resistance of almost two years, reaching into positive territory.

While sector leaders like HDFC Bank and Kotak Mahindra have made strong gains from their lows, IndusInd Bank seems to be moving into positive territory now on an absolute and relative basis. Going forward, as the leaders consolidate at current levels, we expect the laggards to pick up pace, and IndusInd seems like one of them.

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Thanks for reading and please let us know if you have any questions!

Allstarcharts Team