Analysis: HDFCBANK (HDB)

Today’s pick is HDFCBANK [stockquote]HDFCBANK[/stockquote]. The stock has been on an up-move for most part of the year and it experienced the 52 weeks high of Rs. 700 in November. Since then the stock has been in a downward sloping flag formation. In the last three months, the stock has moved +4% vs. +7% of the Nifty’s.

HDFCBANK technical analysis chart

Oscillators RSI and CMO are nearing the over-sold territory and are suggesting a short-term bullish price action. The stock is close to the lower Bollinger band, which is suggesting a bullish move for the stock as well.

The MACD line and signal line are moving very close to each other unable to suggest any short-term direction. Long-term and short-term GMMA lines are very close to each other and are not able to point at the direction of stock movement.

HDFCBANK correlation chart

HDFCBANK’s average correlation with the Nifty is 0.71 is positive and quite strong. The scrip will be closely replicating the movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

HDFCBANK volatility chart

HDFCBANK has a historical volatility in the range of 1.0 to 4.0. The scrip’s volatility however is currently in the lower end of the range and hence should not be a concern to the traders.

Analysts have positive expectations regarding this stock. Less than expected earnings might hit the street expectations in the coming reviews and might impact the stock as well.

Given these technicals, we suggest a short-term Hold. A break-out of the flag in either direction will trigger a longer-term call.

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