Axis Bank witnesses short covering while Bank Nifty surges

Bhagyashree Vivarekar
/ Categories: Trending, Markets, DSIJ News

The third largest private sector bank, Axis Bank, posted its first-ever quarterly net loss in Q4FY18 in the wake of increased provisions and contingencies. It posted a net loss of Rs. 2,189 crore as against Rs 726 crore QoQ and Rs 1225 crore YoY net profits. The results were posted on Thursday, April 26, after market hours impacting the stock prices on Friday.

Axis Bank opened with a marginal gap-down and 2.5 per cent lower than the previous close. However, the open and low price being the same, the stock bounced back immediately and surged more than 5 per cent from the previous close. This was on the back of short covering nearly after 10 straight days of downfall. Thereby, Axis Bank which holds 7.5 per cent weightage in the Bank Nifty, pulled Bank Nifty up to trade with 1.2 per cent gains. Other major stocks like SBI and BOB supported the bounce gaining nearly 5 per cent each.

Bank Nifty had given an upward sloping trendline breakout at the end of February 2018 up to 23,605 levels but bounced back forming a kind of Inverse Head & Shoulders pattern on the daily time frame. The prices are currently trailing at the neckline level. If Bank Nifty gives significant breakout, it may test 25,700-26,100, followed by 26,850 in the medium term. However, the prices are still below the upward sloping trendline and hence if it turns back from the current level, we hold 25,000-24,700 followed by 24,500 as supports. 

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