ICICI share price formed a risky pattern: avoid until this happens

ICICI Bank share price have moved sideways in the past few days and is hovering near its all-time high of INR 958. The stock was trading at ₹937, which is a few points below its record high of ₹958. In all, the stock has jumped by 17% this year and by ~50% from the lowest point in 2022.

RBI interest rate decision

ICICI and other Indian banks have done well in the past few months, helped by the resurgent economy. The most recent results showeed that the company’s operating profit jumped by 36.4% in the first quarter to ₹13,866 crore. Its core operating profit jumped by 34.7% while profit after tax soared by 30%.

The company’s profits jumped, helped by higher domestic loan portfolios and higher interest rates. Like other central banks, the RBI has been hiking interest rates. The interest rate have jumped from the pandemic low of 4.0% to a high of 6.50%.

Banks tend to make more money when interest rates rise since they usually adjust their personal and commercial loans. The RBI is expected to leave rates on Thursday considering that inflation has moved downwards recently.

ICICI and other Indian banks also did well because they were not impacted by the recent collapse of Credit Suisse and Silicon Valley Bank (SVB). For one, the they have higher capital requirements, with ICICI having a Tier-1 capital ratio of 17.60%. Most big banks in the western world have a ratio of less than 14%.

Analysts are also bullish on ICICI share price. In a statement on Tuesday, analysts at Jefferies said that it was optimistic about the company. It cited its ability to grow its earnings, enhanced asset quality, and the ability to deliver a higher return on equity.

ICICI share price forecast

ICICI chart by TradingView

The ICICI stock price has been in a bullish trend in the past few weeks. Most recently, the shares have moved sideways as it sits below the key resistance point at ₹958.05, its all-time high. The stock has moved above the 25-day and 50-day exponential moving averages (EMA).

It has formed a double-top pattern whose neckline is at ₹797. In price action analysis, this pattern is usually a bearish sign. Therefore, bulls need to move above this resistance at ₹958 for the upward trend to continue. If this happens, the next level to watch will be at ₹1,000. Before that, there are signs that the shares could drop in the next few months.