When a Large Cap stock trades inside a band for years, then the breakout leads to explosive move on the upside.
Now just have a look at the SBI Chart
Remember Reliance stock chart
Source: Chartalert.com
State Bank of India stock has traded in a band between 150 and 360 for now 10 years – just imagine what will happen when it breaks out. It will be so explosive that it will drive people mad. Usually, you need a trigger for a breakout. Can this be the trigger?
SBI and other creditors receive Rs 40,000 crores for Essar Steel. IBC Is playing a big role in re-establishing creditor rights and an accountable business culture. https://t.co/AFJZ87m03U
— Sanjeev Sanyal (@sanjeevsanyal) December 13, 2019
At this point of time, it would be less risky to buy SBI stock with stop loss below 300 and hoping for a breakout. A move above 360 will be super fun with stock literally doubling in value in 12-18 months. It can also provide a tailwind for other PSU Bank stocks
Bank of Baroda looks like the second-best stock
Source: Chartalert.com
As you can see in the chart above – the move has been all tentative. It got sold off from 200 dma and finally got some buying support at lows. The real bullishness in these names will come when SBI will breakout above 360.
Canara Bank stock looks no different
Source: Chartalert.com
Punjab National Bank stock also has formed Inverted Head and Shoulder which is a very bullish pattern
Source: Chartalert.com
What does this all mean?
Don’t get your hopes up. Nothing has happened yet. The breakout has to happen first, it’s only then bullish traders will start losing their mind. Post breakout, there will be no if and but. Having said that – the breakout has to happen first. All I am trying to say – keep your eyes open and if the breakout happens, you know what needs to be done. You can also buy in anticipation of the breakout but remember that can be very frustrating if the breakout does not happen and very risky in case of next tier stocks like Bank of Baroda, Canara Bank and PNB
Do let me know your thoughts on the above. I love feedbacks 🙂
Please do your own due diligence before trading.
Deepak Singh says
State Bank of India Zone of support 300-315