Buy Axis Bank Ltd For Target Rs. 830 - ICICI Direct
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Derivatives and Quantitative Outlook
* The recent market weakness has prompted fresh sell-off from the global investors amid rising which triggered selling in banking space. As a result, Bank Nifty has declined by more than 10% from highs and both public and private sector banks have came under pressure. However, even the recovery in broader markets is triggered by banking space and we believe current declines should act as a good entry opportunities for the stocks like Axis Bank.
* While the open interest in Axis bank has been on a declining trend since June 2022 and the leveraged positions have declined significantly before the recent sell-off. However, marginal short additions were observed in the stock once it moved below 730 and October series has started with relatively high open interest. With stock trading near 740, we expect a round of short covering can propel the stock further high and it is likely to move beyond 800 levels once again in coming weeks.
* From the options front, stock has seen significant accumulation among Call strikes across the board. Despite recent recovery, Call options base has remained largely intact. In the last session only, marginal closure was experienced among ATM Call strikes. During the move, ATM and deep OTM strikes saw closure of positions.
* In last 2 years, Axis Bank has been in the broader range of |650-820 amid high volatility and significant buying support was observed on declines near 650 levels. However, recent price action suggest that the same buying support has moved higher and it should not move below 700 levels. In such a scenario, current declines provides a good entry opportunity in the stock
* In the recent weakness, Axis Bank has retested its long term mean levels placed near 715 and witnessed reversal. We expect the current uptrend in the stock to continue and surpass its mean+2*sigma levels.
* Note: Call has been initiated on iClick2Gain on October 04, 2022
Buy Axis Bank in range of | 730-745; Target: | 830; Stop Loss: | 680; Time frame: Three months
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