Top/Down Take: Indian Bank (INDIANB)

JC Parets
February 18, 2021

Here we go with another round of our Top-Down Take post. At All Star Charts we like to keep things simple and look at the bigger picture. We let the charts speak to us and then decide what to do. Always remember, the Trend is our Friend.

Today we’re taking a look at the sector that seems to be rallying with a vengeance! The PSU Banks are out and about, finally enjoying their moment in the sun.

As the name suggests, the Top/Down approach means that we look at the big picture data first, and then funnel it down to the stock-specific idea.

So here we have our universe, the Nifty 500 index. As can be seen, there is no stopping this index. With the breach of 12,260, the next level to track on the index is 16,040.

This means that going forward, our risk management level becomes 12,260. A move below this level will lead to a reevaluation.

What's next? We now look at the sector-specific chart. This requires both and absolute and relative analysis in order to gauge the strength of any given index against the broader market.

The PSU Bank Index moved past the hurdle of 1,900, breathing new life into the sector. With this breach, a strong level of overhead supply has been absorbed. The next target to track will now be 2,645, beyond which 3,445 will come into play.

On a relative basis too, PSU Banks has broken out above the resistance and looks good for a move in the weeks and months ahead.

The next step is to identify a stock that is strong on an absolute and relative basis.

Indian Bank has recovered well from its lows in March 2020. With a breach above the overhead supply zone at 138, the stock is ready to move towards its next target of 208. We are bullish as long as the price remains above 138.

The stock has been performing extremely well on a relative basis too when we look at it compared to the Nifty 500. Making higher highs and higher lows, the bullish trend reversal has been in place since mid-December 2020.

With the relative strength analysis too alluding to strength in the stock, Indian Bank is expected to perform well going forward.

PSU Banks have been under fire for underperforming the market for a really long time now. While this move cannot be pegged as a long-term trend reversal, we are definitely going to take advantage of the short-term strength that's building in this space.

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

Allstarcharts Team

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