With interest rates rising, banks have become one of the sectors to watch lately. Reflecting that change, on Wednesday the Relative Strength Rating for HDFC Bank (HDB) rose to 71, up from 67 the day before. That 71 rating is no great shakes, but its other technical ratings are stronger.
The 71 RS Rating means India-based HDFC Bank has outperformed 71% of all other stocks, regardless of industry group.
Can HDFC Clear Key Benchmark?
Over 100 years of market history shows that the best-performing stocks tend to have an RS Rating north of 80 in the early stages of their moves. See if HDFC Bank can continue to rebound and clear that threshold.
The bank, which operates 5,416 branches across India, has a strong 85 EPS Rating, in part due to double-digit profit growth the past three quarters. Its 81 Composite Rating is a good but not great rating. The best growth stocks have a Composite of 90 or higher before they begin their big runs.
Bullishly, HDFC Bank owns a B Accumulation/Distribution Rating, on an A+ to E scale, indicating that funds and other institutions are buying its stock.
In terms of fundamentals, top and bottom line growth moved higher last quarter. Earnings were up 19% to 63 cents per share, compared to 10% in the prior report. Revenue climbed 10% to $5.59 billion, from 2% growth the prior period.
HDFC Bank is building a consolidation with an 84.80 buy point. See if the stock can break out in volume at least 40% above average.
As you try to find the best stocks to buy and watch, keep a close on eye on relative price strength.
IBD’s unique RS Rating tracks market leadership by using a 1 (worst) to 99 (best) score that indicates how a stock’s price action over the trailing 52 weeks compares to other publicly traded companies.
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