Technically, ICICI Bank stock is not looking great. There are early signs of breakdown – not conclusive yet but signs of nervousness can be clearly seen.
Let us look at the ICICI Bank Weekly Chart
As you can see in the chart above:
Breakdown Phase (August 2011 – August 2012): ICICI Bank slipped below 980-1000 during Aug 2011 correction and post breakdown – the stock slipped sharply to 650. It was a brutal correction. It then took about 13 months to recover above 980. It was only in Sep 2012 that stock climbed past 980.
Recovery Phase (Sep 2013 till June 2013): The stock built a base around 980-1000 and rallied to 1250 by middle of May 2013. But with FIIs getting into sell mode – ICICI Bank corrected sharply from highs.
Breakdown??: And last week – the stock failed to hold above 980 and slipped and closed near 959. This looks like a BREAKDOWN.
What does this mean?
Is stock again going back to 650? Is that even possible. We don’t know that yet. But one thing is for sure – if stock does not recover above 980-1000 in next few days, then yes stock appears very vulnerable for sharp declines. There are two news specific events to which stock has to react to by end of this month:
1. ICICI Bank Earnings by month end
2. RBI Monetary policy
Market participants would be watching stock price reaction. Any recovery above 980-1000 would be greeted by Bulls but any sustained weakness below 980-1000 will invite more nervousness and selling. Keep watching – may be an attractive trading opportunity is developing.
