Breakout stocks of the day: Indian Bank and IDFC First Bank

With price volume support, Indian Bank and IDFC First Bank are strong bullish breakout potential stocks. The stock prices have displayed a broadening wedge breakout and bounce back from 200-day EMA formation, and both presently trading at Rs 494 and Rs 82.

The breakout and pullback align with positive signals from technical indicators such as RSI, ADX, and other key metrics, reinforcing the likelihood of continued upward momentum.

Indian Bank

Daily chart of Indian Bank

Indian Bank is currently displaying sustained bullish momentum on the daily chart, characterised by a notable breakout from a broadening wedge. This breakout is supported by the good volume observed in Monday’s trade, highlighting active buyer participation with substantial daily volume.

Tuesday’s trading session began at Rs 482 and reached a peak of Rs 496. After four months of pattern formation, the stock has successfully breached the upper trendline of the wedge, indicating a potential start of the medium-term uptrend.

The current stock price is trading above its 50-day EMA, driven by increased volume during a particular trading session, indicating a change of hands and a re-accumulation phase. In the case of an upper trendline retest, it may set Indian Bank up for a positive trend shift, and the accumulated volume suggests further growth soon. The bounce from the near-lower resistance acted as support, emphasising the stock’s effort to establish new highs.

On the daily RSI chart, the relative strength index is crossing the level of 65 with a similar pattern formation, and ADX rising at 21 indicates good directional strength, favouring a continued uptrend or slower trend. In the event of a retracement, it is essential to monitor key support levels, particularly at the lower trendline. The upper resistance is uncertain for the stock, and the overall favourable structure is maintained as the stock consistently trades above crucial moving averages, affirming a sustained long-term upward trend.

Indian Bank engages in the provision of banking products and services.

IDFC First Bank Ltd

Daily chart of IDFC First Bank

IDFC First Bank’s current stock performance is characterised by a red candle trading at Rs 82.45 and has the potential to bounce back from Rs 80 as the support and 200-day EMA lie there, accompanied by a significant increase in trading volume in the last 4 days. Currently, the stock price is bouncing back from its support zone and long-term moving average of 200 days.

Starting at Rs 84.05 on Monday, the stock reached an intraday low of Rs 82.35. The last two days’ upsurge is notable as they followed a few days of downtrend, suggesting a likely reversal of the bearish trend if the price manages to close above new higher highs.

The next level of the breakout will occur with a closing of the day candle above the prior high, indicating bullish momentum. After reaching its 52-week high, the stock may witness a rapid ascent in the next trading sessions, following sustained levels near Rs 100. The current market action is supported by a surge in price volume, surpassing the typical trading day volume.

The relative strength index (RSI) recently traded in a lower range at 41.18, suggesting the potential for a significant upward movement in the stock price is still there, particularly as it continues to trade above this level. The ADX, currently at 13, indicates slow directional strength with smaller sideways movement. The 200-day Exponential Moving Average (EMA) serves as a crucial support level during larger corrective movements after the breakout, and the overall market structure favours traders if the stock consistently trades above major moving averages.

IDFC First Bank Ltd is in the provision of financial and banking solutions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.