Axis Bank Stock Analysis: Should You Invest Post Q2 Results?
Last updated: July 28, 2023
Recently, Axis Bank's share price has experienced a significant drop over the last trading session, leading to a strong correction in the stock. The company's results for the second quarter are being analyzed, and the current market conditions and future outlook are discussed.
Current Market Conditions
The latest Current Market Price (CMP) of Axis Bank is at ?787. Analysts, however, expect a strong correction to the levels around ?760 in the near future. The recent closing of the stock below the crucial 760 mark has prompted a new strategy among investors: starting to buy one share every day.
As of today, the closing price is at ?759. Despite the potential for further downside, analysts suggest waiting for a reversal in the trend before initiating purchases. This reversal might take place within 3 to 4 trading sessions, after which there could be appreciable gains.
Key Factors Impacting Axis Bank
The main reason for the drop in Axis Bank's share price is a combination of higher provisions and contingencies, along with increased gross slippages. According to the financial report, provisions and contingencies increased by 14.3% year-over-year (YoY) and 41% over the previous quarter, reaching ?3814.6 crore. Gross slippages rose to ?4798 crore during the June quarter of 2019.
Despite these financial highlights, many analysts still consider Axis Bank to be a good investment opportunity over the long term. The results, while somewhat disappointing, are seen as a stepping stone towards a potential recovery. The bank has a history of delivering good returns and maintaining stability in the market, even when other banking stocks may be experiencing declines.
Future Outlook and Recommendations
Investing in Axis Bank for the long term is not necessarily a bad strategy. The current price provides a good opportunity for investors to establish a position. Analysts expect the stock to find support at around ?650, making it a favorable entry point to accumulate shares gradually over time.
It is important to note, however, that the broader market conditions are also influencing the banking sector. For the time being, the sector is expected to be in a corrective mode. It is recommended to avoid investments until the market shows signs of recovery.
Conclusion
Axis Bank, a reputable name in the banking sector, is facing some challenges but also presents long-term investment opportunities. By carefully analyzing these opportunities and understanding the broader market trends, investors can make informed decisions. The current market offers a dynamic environment, making it a valuable time for those looking to enter the banking sector with a long-term perspective.