Banking: making a come back

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: 3.45%. On the weaker side, the BSE IT index was the largest loser ending 8.37% lower and was followed by the BSE Metals index which lost 8.21% lower.

With the possibility of an intermediate rally, the beaten down sectors like the banking sector, the reality and the capital goods sectors are the ones to lead the rally. Other sectors will than follow. Usually an intermediate rally retraces about 38.2% to 50.0% of the earlier intermediate decline, but in some cases we also see a retracement of 61.8%.

I will today take a look at some of the banking stocks which are likely to lead in the intermediate rally.

State Bank of India

SBI is a major downtrend as the stock has been staying below its falling 30 WMA and has been exhibiting descending intermediate tops and bottoms. Currently, the stock went into a fresh intermediate uptrend by closing past its target of 1,276.40 and is in an intermediate rally ahead of the indices.

This suggests that the stock will lead the rise in the intermediate rally. The immediate target for the stock in the current intermediate rise is between 1,450 and 1,500 which are likely to be attained on the event date of 29th. July. As the major trend of the stock is down, the current intermediate rise is just a trading activity on the long side for swing traders. Keep a stop at 1,217 and trail the stop as the stock moves higher.

Bank Of India

BoI has exhibited ascending minor bottom and a close past 260 on Monday will confirm a start of an intermediate uptrend. Like most of the stocks, the major trend of the stock remains down as the stock is trading below its 30 WMA and is exhibiting descending intermediate tops and bottoms.

Once the stock closes past 260, it will be headed towards the target of 280-290 till the next event date of July 25. Swing traders and position traders must trade the stock on the long side with a stop at 243. Trail the stop as the stock moves higher. Investors must stay away from the stock as the major trend remains down.

Axis Bank