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Axis Bank Shares Rally 9% On Bain Capital’s $1 Bn Investment Plan. Whats Next??

Axis Bank shares rally 9% on Bain Capital’s $1 bn investment plan. Whats next??

Axis Bank rallies most in 20 months.
Indias third biggest private lender extended gains, rising as much as 9%, the most in over 20 months as big players bet positively on the developments surrounding of share purchase talks.

The bain capital a PE firm is in talks with the lender to invest around USD 750 million to around USD 1 billions (Rs4,800-6,400 crore) which will account to acquire 5% stake. The proposed investment will come to the primary issuance of shares through a preferential allotment. This deal would be one of the largest private equity investment in the Indian bank sector.

The stock has reacted very positively gain around 9% intraday. Will the upside momentum continue ??

 

The Weekly chart attached denotes that stock price finds support near median term upsloping trendline support where price has seen advancing earlier as well. However, the strong upside move has led price to hit 50% retracement levels of its previous downfall from 638 to 425 levels. This 50% retracement has been the key resistance for the stock as we can see price has halted and has witnessed selling pressure from here. Thus to continue to upside momentum price will have to break and sustain above the same. If this time price breaches this resistance zone price can advance higher to test 557-560 levels and price successfully breaching this zone will open the gate for next level of 590-592 levels. And conversely, on the lower side price, the rising trendline can act as a key support for the stock price.

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