Domestic brokerage firm Religare Broking has picked Federal Bank as its stock pick of the month for May 2024, with a potential upside seen at around 13 percent. Shares of Federal Bank were on an uptrend and gained one percent today to hit an intra-day high of ₹158.55 against a 52-week high of ₹166.65 apiece on the BSE.
On Friday, April 26, shares of Federal Bank settled 0.61 percent higher at ₹156.95 apiece on the BSE. Federal Bank has given five percent returns in the last month, 10.79 percent returns in the last three months, and 17.77 percent returns in the last year, according to Trendlyne data.
Technical View:
At a current market price (CMP) of ₹156, Religare sees a potential upside of 13 percent on Federal Bank stock at a target price of ₹176 from an initiation range of ₹154- ₹157 and a stop loss of ₹146.
Religare Broking highlights in its report that the Federal Bank has been gradually inching higher, forming base on base pattern on the higher degree chart highlights accumulation at the elevated levels. The stock has been trading in an upsloping channel for more than 10 months and recently has rebounded higher after taking support near the lower band of the channel.
‘’It has formed an inverted head & shoulder pattern, which coincides with its short-term moving averages, adding further confirmation to the bullish view. Following price pattern and volume activity, we believe the price is now set to inch higher to test the upper boundary of the upsloping channel,” said Religare Broking.
Rationale:
The stock was almost unchanged in the previous series but witnessed substantial open interest (OI) addition to the tune of 43 percent. 98 percent of the open positions rolled with respect to 94 percent previously. OI of 23,000 contracts as against 16,000 previously. Decent cash-based buying was also seen in the last three days of the April series. With fresh cash accumulation and formation of probable longs, the stock may see higher levels, according to the brokerage.
Federal Bank Q3 Results:
Federal Bank reported a net profit of ₹1,006.74 crore for the third quarter of FY24, registering a growth of 25.3 percent from ₹803.61 crores in the year-ago period. The private-sector lender’s net interest income (NII) in Q3FY24 increased 8.5 percent to ₹2,123.4 crore from ₹1,956.5 crore YoY. The lender’s net interest margin (NIM) during the December quarter fell to 3.19 percent from 3.22 percent in the September quarter.