Axis Bank Bounces Back: Analysts Predict Short Coverings Ahead
Axis Bank, a prominent player in the banking sector, has recently seen a significant recovery in its stock price, soaring 8 percent from the lows experienced in late January after a seven-month decline. This positive momentum has been attributed to the fact that the stock is currently sustaining above its 8-day exponential moving average (EMA), indicating a potential upward trend in the near future.
Neeraj Agarwal, an expert from JM Financial, highlighted that Axis Bank historically exhibits a stronger seasonality in the second quarter of the calendar year, with the formation of a bottom typically occurring in the first quarter. This pattern suggests that the bank may be on the brink of short coverings in the upcoming period, leading to a further boost in its stock performance.
### Expert Insights: Neeraj Agarwal on Axis Bank’s Recovery
Agarwal emphasized that the recent decline in Axis Bank’s stock, from its peak of around Rs 1,340 on July 12, 2024, to a low of Rs 933 on January 27, 2025, has been a cause for concern. However, he pointed out that the quarter-to-date decline of 5 percent, though significant, is not unprecedented, with similar negative returns observed in previous years such as 2018, 2020, and 2023.
Moreover, when compared to historical data over the past decade, Axis Bank has shown resilience during the second quarter, closing in the green on eight occasions with an average return of 6 percent. Agarwal noted that mutual funds are currently under-weight on the stock, indicating a potential opportunity for investors to capitalize on the anticipated upswing.
### Technical Analysis and Market Trends
Agarwal further analyzed the technical aspects of Axis Bank’s stock performance, highlighting a promising trend in the post-Covid-19 era. He mentioned that the stock has been trading within an upward sloping channel pattern, with recent movements suggesting a shift in favor of Axis Bank. This pattern, coupled with higher trading volumes and delivery volumes, indicates a bullish sentiment surrounding the stock.
Looking at the futures and options (F&O) market, Agarwal pointed out a significant increase in cumulative future open interest, signaling a potential wave of short coverings in the near term. Despite a minor dip in the stock price on Friday, closing 0.89 percent lower at Rs 999.25, the overall outlook remains positive for Axis Bank, with analysts predicting further upside potential in the coming weeks.
In conclusion, while Axis Bank’s recent recovery marks a significant milestone for the institution, it is essential for investors to approach the market with caution and seek professional advice before making any investment decisions. With expert insights pointing towards a positive trajectory for the bank, the stage is set for a potential resurgence in Axis Bank’s stock performance in the days ahead.
