May 25, 2020

The Oddity of SBIN

Today I will be looking at the State Bank of India. I believe that SBIN will be going up drastically in the upcoming years and theres a few reasons why.

While I was looking at the history and trends regarding SBIN, I cam across much dilemma and confusion. The past few years did not seem to directly show any strong patterns of an uptrend or a downtrend. It seems to be that SBIN has been on a sideways trend since June of 2010 (roughly 10 years ago).

This was further warranted by locating the levels of support and resistance over the last 10 years. We can see that the level of resistance has consistently been in the 350-360 range, after which SBIN fell to roughly 145. Both levels of support and resistance have been consistently tested and resilient for the past 10 years. This can not merely be a coincidence nor do I believe these levels can or will be broken easily.

The State Bank of India had become a great interest to me recently as once again SBIN is testing its support level . Currently around 150, it is coming close to reaching the lowest point in the past 10 years. However, I do not believe that SBIN will break the level of support and fall further. I believe a rebound is imminent, just like what has happened the past 3 times SBIN has been this low.

Although simply looking at resistance and support may be tempting to draw a conclusion, further analysis is necessary to be more confident. I decided to use moving averages to reinforce my belief.

The first indicator I used is MACD (Fast 50, Slow 200, Smoothing 25). Simply looking at the past few years this technical indicator has been fairly consistent and showing rebounds and reversal of trends.

We can currently see that currently there has been a sharp decline since the start of March (aligning with the COVID-19 pandemic). We can see that the past few times SNIB has touched support the MACD value has been around -27 to -30. After this the trend showed a reversal and SNIB starting rising. The “slope” (or derivative if calculus better suits you) is gradually decreasing, indicating that SNIB is coming closer to the lowest point, after which it will go up.

The consistency and cyclical nature of the State Bank of India seems to suggest that it will rebound back just as it has before. I predict over the next 3 years (By beginning of 2022) SBIN will be back to its resistance level (assuming the trend continues as it has for the past 10 years). This would be roughly a 140% return. Even if it does not reach resistance, investors have a good bet as SNIB is getting closer to what may be its lowest for the foreseeable years.

Please let me know if there is anything I am missing out or failed to notice. I am learning through ideas and I appreciate all the feedback.

The Oddity of SBIN by AHiray on