ICICI Bank: 280-265 May Be Strong Demand (Support) Zone---Yesterday's RBI SDR May Help All Banks (Including ICICI)

Technically, for ICICI Bank (CMP: 283) has strong positional support zone of around 280-265 & it need to sustain above 285-291 for an immediate target of 300-312. Consecutive closing above 312, it may target 321-329-337 in the short term, followed by 346-362 in the medium term. In the long term,

sustain only above 362-368, ICICI Bank may scale 393-425 & 530 area (FY:17-18).

On the down side, sustain below 274-270, it may fall to 265-250-244-230-215-205-200-188 zone in the worst bear case scenario.

In the near term, 280-265 may be strong demand (support) zone & 321-346 might be good supply (resistance) zone.

Bottom Line: Technical Trading Levels (Positional)

	SL</>2	FROM SLR
		ICICIBANK	CMP	283
			T1	T2	T3	T4	T5	T6	T7	SLR
Strong >	280		291*	300	312*	321-329	337	346	362-368-393	<275
Weak <	275		270-265*	250	244	230	215	205	200-188	>280

Recently, ICICI Bank undergone good correction (nearly 25% from its intermediate top). Apart from  RBI event date (rate cut) & poor monsoon forecast by IMD and other common factors affecting the overall market sentiment, it has huge debt exposoure to JP Group (around Rs.13000 cr as par old report). Also IDBI & SBI has also good exposure (nearly Rs.8000 & 6500 cr) to JP group, which is reeling under astronomical debt burden of around Rs.1 L cr (including JP Power). But, most of these exposures are backed by hard assets. Thus there may be interim cash flow mismatch, ultimate write downs might be lower.

Also, yesterday evening, RBI announced new norms for "Strategic Debt Conversion"-SDR, which will give lenders the right to covert their O/S loans into majority share holding (=>51%), if the distressed borrowers fails to meet the stipulated conditions under the loan restructuring package (CDR).

Certainly, this may help the ailing banking industry, which is reeling under huge NPA(s)/stressed assets & ICICI Bank may be one of the beneficiary of them.  

As par quick BG metrics, current median valuation of ICICI Bank may be around 320 & projected fair valuations might be 345-380 (FY:16-17) under the current market conditions (conservative estimates). But as par some other estimates its median forecast is around 425-525 (FY:17-18).

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
ICICIBANK	19.25	126.19	17.25	323.93	315.76	319.85	316	300.26

ICICIBANK

22.29

138.2

17.25

348.57

339.78

344.18

316

300.26

ICICIBANK

26.61

151.35

17.25

380.86

371.25

376.05

316

300.26