WILL KOTAK MAHINDRA BANK BREAKOUT AFTER 28 MONTHS OF CONSOLIDATION?
The nifty 50 and bank nifty heavyweight and the banking giant Kotak Mahindra bank is still now in a straight consolidation for 28 months. The stock is trading within a resistance zone of 2050 and support of 1650. Let’s closely analyze the stock to find whether there is a buying opportunity in the stock as banking sector is showing bullish momentum and whether it helps Kotak Mahindra bank to regain its strength and move back up.
Overview
Kotak Mahindra Bank Limited is a nifty 50 heavy weight and India’s leading private sector bank . It was founded in 1985 by Uday Kotak and has its headquarters in Mumbai, Maharashtra. The bank is one of major heavy weights in Nifty and Bank Nifty. Kotak Mahindra bank has a weightage of 3.34 % in Nifty 50 and 11.72% weightage in Bank Nifty .The bank offers a wide range of financial products and services, including personal and commercial banking, wealth management, investment banking, and asset management, among others. Kotak Mahindra Bank has a strong presence in India with a widespread network of branches and ATMs across the country. It is known for its customer-centric approach, innovative offerings, and robust risk management practices.
Performance
The stock price of Kotak Mahindra bank is consolidating in a negative bias for 28 months as the stock was facing step sell off by the Foreign Investment Institutions. Kotak Mahindra Bank has shown consistent growth and has delivered strong financial performance over the years. Its key financial parameters, such as net profit, total assets, and customer base, have been steadily increasing. Kotak Mahindra banks has reported Profit After Tax (PAT) of 2,755 crores in Q1FY23 a customer base of over 20 million. The bank has maintained healthy asset quality with a low non-performing asset (NPA) ratio, which indicates its robust risk management practices. Additionally, Kotak Mahindra Bank has a strong capital adequacy ratio, which reflects its sound financial position and ability to withstand adverse economic conditions.
Best Price Level to Add Kotak Bank to Your Portfolio
From November 2020 till the date the banking giant Kotak Mahindra bank is in a tight consolidation zone of 2050 to 1650. The 1650 zone is acting as a strong support for the stock and adding at a level of 1630 – 1650 can be considered as the best entry for the stock. The stock is trading at a value of 1870 as of 26th April 2023. The zone 1950 can act as an immediate resistance for the stock and breaking this zone this good volume and indicate strength in the stock and can move upwards.
Reasons behind fall in share price
The decline of stock price in Kotak Mahindra bank in past few years could be attributed to a combination of factors, including economic slowdown and global factors, concerns about inflation and interest rates. Heavy foreign investment institutional selling was also a reason for the underperformance in the stock and banking sector. Lets closely understand some reasons behind the fall in share price.
• primary reasons for the decline of Kotak Mahindra bank in 2022 could be attributed to the economic slowdown both globally and domestically. The impact of trade tensions, geopolitical issues, and changes in global monetary policies can significantly affect investor sentiment and result in a decline in Banking stocks.
• Another crucial factor that may have contributed to the fall of Kotak Mahindra bank is the concerns about inflation and interest rates. Higher interest rates can also impact banks’ lending and borrowing activities, potentially leading to a decline in their profitability and stock prices.
• Heavy foreign institutional selling was other major hit for the heavy weight stocks. Including Kotak Mahindra banks .FII has sold for 278429.45 crores in the year 2022 which created huge bearishness all over the market.
• Other factor which influenced the share price fall apart from investor sentiment is the changes in regulations related to capital adequacy, lending norms, and other banking policies can impact the profitability and operations of banks, leading to a decline in their stock prices
