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Banking sector: Is it the correction or the commencement of a downtrend

Well, whenever we talk about private banks, what comes first?

HDFC Bank

HDFC bank! Right? As we all know HDFC Bank is India’s largest private sector bank by assets. It is the largest bank in India by market capitalization as of March 2020.

It also contributes heavy weightage in the banking index, which means the movement in HDFC bank will affect the entire banking sector.



COVID situation which turned to various sectors in a sharp downfall, globally. The Banking sector is also being in pain during these situations.

A very major problem arises in front of banking sector was increased in credit risk in various sectors. Many small scale businesses were in fear of becoming bankrupt in every sector and many large businesses were also in the fear of suffering through huge debt.



 
What does the chart say?


Though before COVID the stock was moving in an uptrend then crash led to fall in stock price of -41.12% and this impact -49.09% fall in bank nifty. Here I want to explain my views on the chart.

The price started to move in a channel pattern as you can see the price was actually respecting the upper and lower lines very frequently and in a very smooth manner price took the support on a very crucial level which is 70% of fibbonacci.


  1. After breaching the very first resistance price is not able to take support on that level as the volume was low.

  2. Though the breakout was failed price tried to test the lower level and took the support at 30% fibbonacci level (which is a very important level for expansion).

  3. All of a sudden with very high volume the price took the support and confirmed its support at the lower line of the channel pattern.

  4. At this level, price came down in the form of pull back as the volume where the witness of it.

  5. Finally the resistance got broken with a very high volume, which significantly confirms the increase in the number of buyers in respect to the sellers.

The new levels were created by buyers and sellers who are the prominent factor of this entire market. Finally the price is back to that level where it was earlier trading.

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