Technical Stock Pick: Contra Buy! What does the 3-dip pattern tell about Kotak Mahindra Bank price movement?


Kotak Mahindra Bank Ltd, part of the private banking space, has fallen over 11% from May 2023 highs but it has bounced back from crucial support and the upmove could extend towards 2000 levels.

Short-to-medium-term traders can look to buy the stock on dips towards 1800-1850 levels, suggest experts.

The stock hit a 52-week high of Rs 2063 on 31st May 2023, but it failed to hold on to the momentum. The stock closed at Rs 1826 on 8th January 2024, translating into a fall of over 11%.

The banking stock has been consolidating in the range of 1700 to 2000 for over 100 weeks which has led to the formation of a 3-dip pattern on the weekly charts. The stock has formed a strong base above 1600 levels.

On the daily charts, the stock closed below the 20-DMA, but it is still trading above the 50-DMA placed around 1800 levels. The Supertrend indicator triggered a buy on the daily charts earlier in December.

The stock is trading above 50,100 and 200-DMA on the daily charts. The daily Relative Strength Index (RSI) is at 45.0. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed.

“In the banking sector, Kotak bank has been consolidating in the range of 1700 to 2000 for over 100 weeks, and the stock is currently rebounding from the lower band of consolidation, which also coincides with long-term moving average support,” Kapil Shah, Technical Analyst, Emkay Global Financial Services Limited and Trainer at FinLearn Academy, said.

“Additionally, the stock has formed an interesting 3-dip pattern, indicating a strong upside move after the third dip. On top of that, the stock is taking support at a horizontal line and short-term moving average after an immediate correction,” he said.

“It seems the stock is a good buy at the 1852 level, with a stop loss of 1800. The stock is expected to have an upside move up to the 1980 to 2000 level,” recommended Shah.

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(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)



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