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Axis Bank Ltd.
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Axis Bank Ltd.

  • 753.9522.70 (3.10%)
  • Closed
  • As On: 03 Mar, 2021, 03:59 PM IST
OPEN TRADING A/C
  • Open740.50
  • High760.80
  • Low735.10
  • Prev Close731.25
  • Volume1,36,03,791
  • VWAP(₹)750.04
  • Q3 – Higher provisions

    Bank had been prudent in front loading trouble by following policy of making higher provisions both for possible covid and non-covid related non-performing assets.
  • Asset quality stabilizing

    The lower divergence in reported gross NPA for Q3 of FY-21 (3.44 %) due to SC ruling and possible gross NPA (4.55%), indicates lower probability of any major negative surprise on asset quality in near term.
  • Need to increase market share

    Currently, Axis Bank’s market share in many segments of banking is not very high. If the bank can put its act together and increase its market share in segments like retail loans, credit cards, fee-based income and auto finance. Overall margins would expand at much faster pace.
  • Moratorium book is important

    While Axis Bank has made reasonable provisions for loans under the moratorium book. The recovery rate from this book is an important factor to watch for next two quarters.

Found Insights useful?

Key Metrics

  • PE Ratio(x)77.15
  • EPS - TTM(₹)9.77
  • MCap(₹ Cr.)2,30,773
  • MCap Rank5
  • PB Ratio(x)2.59
  • Div Yield(%)0.00
  • Face Value(₹)2.00
  • 52W High(₹)799.00
  • 52W Low(₹)286.00
  • MCap/Sales1.68
  • Beta(1 Month)1.10
  • BV/Share(₹)282.39

Returns

  • 1 Day3.1%
  • 1 Month2.75%
  • 3 Months25.1%
  • 1 Year9.72%
  • 3 Years43.4%
  • 5 Years80.74%

Axis Bank Recommendations

No Recent Recos Available

Financials

    • Pre-existing slowdown

      The domestic economy was slowing even before the Covid-19 pandemic, with growth weakening steadily since peaking in last quarter of fiscal 2018. While the slowdown was initially linked to credit concerned at NBFC, weak auto sales and soft capex trends resulted in further weakening of economic conditions.

    • Focus on quality corporates

      The corporate banking fee growth remained subdued during the year as the bank continued to focus on better rated corporate clients.

    • Cleaning the BB pool

      The asset quality metrics improved during the fiscal, with reduction in NPA ratio year on year. During this fiscal quantum of low rated pool of BB and below accounts ( excluding investment and non- fund based exposure ) reduced and stood at Rs 6,528 crores as compared to Rs 7,467 crores at the end of fiscal 2019.

  • Dec 2020Sep 2020Jun 2020Mar 2020Dec 2019
    Total Income19,910.9320,446.7919,461.7720,786.2319,975.99
    Total Income Growth (%)-2.625.06-6.374.060.45
    Provisions & Contingencies4,625.684,606.114,440.767,834.243,487.23
    Provisions & Contingencies Growth (%)0.423.72-43.32124.66-2.60
    Profit after Tax (PAT)1,317.911,836.661,099.52-1,262.431,875.72
    PAT Growth (%)-28.2467.04--167.30-
    Gross NPA (%)-----
    Net NPA (%)-----
    Net Profit Margin (%)6.628.985.65-6.079.39
    Basic EPS (₹)4.316.223.90-4.486.65
    Dec 2020Sep 2020Jun 2020Mar 2020Dec 2019
    Total Income19,274.3919,870.0719,125.5720,219.5719,494.87
    Total Income Growth (%)-3.003.89-5.413.720.83
    Provisions & Contingencies4,604.284,580.654,416.427,730.023,470.92
    Provisions & Contingencies Growth (%)0.523.72-42.87122.71-1.35
    Profit after Tax (PAT)1,116.601,682.671,112.17-1,387.781,757.00
    PAT Growth (%)-33.6451.30--178.99-
    Gross NPA (%)3.444.184.724.865.00
    Net NPA (%)0.740.981.231.562.09
    Net Profit Margin (%)5.798.475.82-6.869.01
    Basic EPS (₹)3.655.703.94-4.926.23
    FY 2020FY 2019FY 2018FY 2017FY 2016
    Total Income80,057.6770,232.4158,476.6757,596.7051,364.23
    Total Income Growth (%)13.9920.101.5312.1315.26
    Provisions & Contingencies22,117.2214,581.6515,620.5914,114.698,051.04
    Provisions & Contingencies Growth (%)51.68-6.6510.6775.3230.57
    Profit after Tax (PAT)1,853.115,038.59455.823,953.038,349.67
    PAT Growth (%)-62.78987.68-88.30-52.5312.21
    Net Interest Margin (%)2.772.722.703.003.20
    Net Profit Margin (%)2.908.990.978.7520.16
    Basic EPS (₹)6.8319.611.8616.5435.12
    FY 2020FY 2019FY 2018FY 2017FY 2016
    Total Income78,171.7268,116.1156,747.4056,233.4750,359.50
    Total Income Growth (%)14.7620.030.9111.6614.86
    Provisions & Contingencies21,810.9214,328.5015,318.8013,905.247,879.95
    Provisions & Contingencies Growth (%)52.22-6.4610.1776.4630.73
    Profit after Tax (PAT)1,627.224,676.61275.683,679.288,223.66
    PAT Growth (%)-65.211,596.38-92.51-55.2611.77
    Net Interest Margin (%)2.752.712.693.003.20
    Net Profit Margin (%)2.598.500.608.2620.06
    Basic EPS (₹)5.9918.201.1315.4034.59

    All figures in Rs Cr, unless mentioned otherwise

    Insights
    • Beating 3 Yr Revenue CAGR

      Company's annual revenue growth of 13.99% outperformed its 3 year CAGR of 11.48%. (Source: Consolidated Financials)
  • AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Advances5,82,958.845,06,656.124,49,843.653,81,164.673,44,663.32
    Advances Growth (%)15.0612.6318.0210.5921.17
    Deposits6,42,157.215,50,745.944,55,657.764,14,982.683,58,302.19
    Deposits Growth (%)16.6020.879.8015.8211.19
    Total Equity86,453.9867,887.2364,276.9256,441.6653,597.81
    Total Equity Growth (%)27.355.6213.885.3119.16
    Gross NPA (%)-----
    Net NPA (%)-----
    Capital Adequacy Ratios (%)-----
    Contingent Liabilities9,25,006.767,58,228.987,88,705.377,54,191.715,89,326.23
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Advances5,71,424.164,94,797.974,39,650.303,73,069.353,38,773.72
    Advances Growth (%)15.4912.5417.8510.1220.52
    Deposits6,40,104.945,48,471.344,53,622.724,14,378.793,57,967.56
    Deposits Growth (%)16.7120.919.4715.7611.02
    Total Equity84,947.8466,676.3063,445.2655,762.5453,164.91
    Total Equity Growth (%)27.405.0913.784.8919.00
    Gross NPA (%)4.865.267.385.211.75
    Net NPA (%)1.562.063.692.270.74
    Capital Adequacy Ratios (%)17.5315.8416.5714.9515.29
    Contingent Liabilities9,22,968.767,55,765.270.000.005,87,961.04

    All figures in Rs Cr, unless mentioned otherwise

    Insights
    • Loan Book Growth - Beating 5 Yr CAGR

      Axis Bank Ltd. reported a YoY increase of 15.06% in its advances, which is higher than its 5 yr CAGR of 11.08%. (Source: Consolidated Financials)
  • AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Net Cash flow from Operating Activities30,415.6437,125.25-38,390.3032,208.62-31,076.68
    Net Cash used in Investing Activities-9,658.86-18,691.49-10,046.93-12,443.169,225.29
    Net Cash flow from Financing Activities8,865.135,642.6041,342.09-2,486.9119,076.69
    Net Cash Flow29,795.4724,093.50-7,055.3017,263.31-2,789.29
    Closing Cash & Cash Equivalent97,799.7768,004.3143,910.8150,966.1233,702.81
    Closing Cash & Cash Equivalent Growth (%)43.8154.87-13.8451.22-7.64
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Net Cash flow from Operating Activities29,613.2837,566.92-46,693.3034,192.28-15,971.85
    Net Cash used in Investing Activities-9,767.04-18,736.52-10,500.31-12,630.39-5,435.51
    Net Cash flow from Financing Activities10,117.974,931.3450,400.78-4,628.8718,671.58
    Net Cash Flow30,063.6523,749.74-6,801.2916,930.74-2,773.59
    Closing Cash & Cash Equivalent97,268.2867,204.6443,454.8950,256.1833,325.44
    Closing Cash & Cash Equivalent Growth (%)44.7354.65-13.5350.80-7.68

    All figures in Rs Cr, unless mentioned otherwise

    Insights
    • Decrease in Cash from Investing

      Company has used Rs 9658.86 cr for investing activities which is an YoY decrease of 48.32%. (Source: Consolidated Financials)
  • AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Return on Equity (%)2.147.430.707.0115.58
    Return on Assets (%)0.190.610.060.641.56
    Cost to Income (%)50.1944.5652.0046.6036.33
    Interest income to Earning assets (%)6.866.886.627.387.78
    Interest Expense to Earning assets (%)4.094.163.924.384.57
    Price to Earnings (x)57.8039.68294.1229.7612.69
    Price to Book (x)1.242.942.042.081.98
    Price to Sales (x)1.683.562.802.602.56
    Operating Profit Margin (%)-22.69-16.31-24.45-18.71-3.85
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Return on Equity (%)1.917.010.436.5915.46
    Return on Assets (%)0.170.580.030.611.56
    Cost to Income (%)50.0344.2851.6446.4235.70
    Interest income to Earning assets (%)6.846.866.627.407.80
    Interest Expense to Earning assets (%)4.084.153.924.394.59
    Price to Earnings (x)65.7942.74476.1932.0512.89
    Price to Book (x)1.262.992.062.111.99
    Price to Sales (x)1.713.632.862.642.58
    Operating Profit Margin (%)-22.20-15.37-23.35-17.98-2.80

Found Financials useful?

Technicals

  • 5 Day EMA Crossover

    Bullish signal on daily chart

    Appeared on: 3 Mar 2021

    5D EMA: 741.77

    Last Signal 24 Feb 2021 (Gain 4.55%)

    Average price gain of 3.10% within 7 days of Bullish signal in last 5 years

    10 Day EMA Crossover

    Bullish signal on daily chart

    Appeared on: 3 Mar 2021

    10D EMA: 742.25

    Last Signal 24 Feb 2021 (Gain 4.55%)

    Average price gain of 3.03% within 7 days of Bullish signal in last 5 years

    14 Day EMA Crossover

    Bullish signal on daily chart

    Appeared on: 3 Mar 2021

    14D EMA: 740.72

    Last Signal 24 Feb 2021 (Gain 4.55%)

    Average price gain of 2.97% within 7 days of Bullish signal in last 5 years

    20 Day EMA Crossover

    Bullish signal on daily chart

    Appeared on: 3 Mar 2021

    20D EMA: 735.39

    Last Signal 24 Feb 2021 (Gain 4.55%)

    Average price gain of 3.01% within 7 days of Bullish signal in last 5 years

    Heikin-Ashi Changeover

    Bullish indication on daily chart

    • Prev. Close Price

      747.59

    • LTP

      753.95

    Formed on: 3 Mar 2021

    On daily price chart, Heikin-Ashi candle changed from Red to Green

    Stochastic Crossover

    Bearish signal on weekly chart

    Appeared on: 26 Feb 2021

    Region: Equlibrium

    Last Signal 22 Jan 2021 (Loss -4.42%)

    Average price decline of -5.80% within 7 weeks of Bearish signal in last 10 years

  • 46%
    Positive Movement
    since 1st Jan 2005
    on basis
    53%
    Negative Movement
    since 1st Jan 2005
    on basis
    Exclude

    Global Meltdown1st Jan 2008 to 10th Nov 2008

    Covid Crisis1st Feb 2020 to 31st Mar 2020

  • R1764.80Pivot

    749.95

    S1739.10
    R2775.65S2724.25
    R3801.35S3698.55
  • 5 Days14 Days28 Days
    29.6429.1426.66

Found Technicals useful?

Peers

  • NAMEP/E (x)P/B (x)ROE %ROA %Rev CAGR [3Yr]OPMNPMNIM %Cost to Income %Interest income to Earning assets %Net NPA %Capital Adequacy Ratio %
    Axis Bank77.152.672.140.1911.48-22.692.902.7750.196.861.5617.53
    ICICI Bank29.593.367.980.699.62-63.3211.272.9162.686.151.5416.11
    Kotak Bank40.425.6012.891.9313.86-24.7425.673.9651.347.550.7117.89
    IndusInd Bank35.902.4412.941.4524.10-8.6615.483.9240.729.360.9115.04
    Bandhan Bank21.823.7619.893.2941.7513.5427.776.8938.9911.860.5827.43
    Add More
    Annual Ratios (%)

    Choose from Peers

    • YES Bank
    • IDFC First Bank
    • Federal Bank
    • RBL Bank
    • City Union Bank

    Choose from Stocks

      • CHART
      • TABLE
      • 1D
      • 1W
      • 1M
      • 3M
      • 6M
      • 1Y
      • 5Y
    Insights
    • Stock Returns vs Nifty 100

      Stock gave a 3 year return of 43.4% as compared to Nifty 100 which gave a return of 39.2%. (as of last trading session)
    • Stock Returns vs Nifty Bank

      Stock generated 43.4% return as compared to Nifty Bank which gave investors 42.23% return over 3 year time period. (as of last trading session)

    Found Peer Comparison useful?

    Shareholding Patterns

    • CategoryNo. of SharesPercentage% Change QoQ
      Promoters41,60,39,57413.93 %-0.85
      Pledge00.00 %0.00
      FII1,61,18,75,59253.97 %1.83
      DII61,46,43,80220.58 %-0.45
      MF53,59,69,04917.95 %-0.64
      Others41,89,06,11411.52 %-0.53
    • Category31 Dec 202030 Sep 202030 Jun 202031 Mar 2020
      Promoters13.9314.7815.9916.00
      Pledge0.000.000.000.00
      FII53.9752.1448.0947.19
      DII20.5821.0322.2923.24
      Mutual Funds17.9518.5919.6120.51
      Others11.5212.0513.6313.57

    Mutual Funds Ownership

    MF Ownership as on 31 January 2021

    • Equity: Large Cap
      • 2,472.28

        Amount Invested (in Cr.)

      • 2.8%

        % of AUM

      • 1.40

        % Change (MoM basis)

    • Equity: Large Cap
      3
      • 1,443.85

        Amount Invested (in Cr.)

      • 5.66%

        % of AUM

      • 0.08

        % Change (MoM basis)

    • Equity: Large Cap
      • 1,353.01

        Amount Invested (in Cr.)

      • 3.45%

        % of AUM

      • 3.37

        % Change (MoM basis)

    Futures & Options

      • Type
      • Expiry Month
      • Strike Price
      DatePrice

      27-09-2020Current

      0.00-203.00 (-100.00%)

      0.00
      Open
      0.00
      High
      0.00
      Low
      203.00
      Close
      0
      Contracts Traded
      0.00
      Turnover (₹ Lakhs)
      • Expiry Month
      DatePrice

      27-09-2020Current

      757.6023.50 (3.20%)

      740.50
      Open
      765.30
      High
      738.00
      Low
      734.10
      Prev Close
      12,288
      Contracts Traded
      1,11,120.91
      Turnover (₹ Lakhs)

    Corporate Actions

    • Board Meeting

      Quarterly Results

      Dec 21, 2020

      General Meeting

      -

      Nov 09, 2020

      Board Meeting

      Quarterly Results

      Sep 28, 2020

    • Announced onMeeting on
      Dec 21, 2020Jan 27, 2021
      Quarterly Results
      Sep 28, 2020Oct 28, 2020
      Quarterly Results
      Jul 14, 2020Jul 21, 2020
      Quarterly Results
      Jun 30, 2020Jul 02, 2020
      Others
      Apr 23, 2020Apr 28, 2020
      Audited Results
    • Announced onEx-DateDividend%
      Apr 25, 2019Jul 04, 201950%
      Apr 28, 2017Jul 06, 2017250%
      Apr 26, 2016Jul 07, 2016250%
      Apr 29, 2015Jul 09, 2015230%
      Apr 25, 2014Jun 12, 2014200%
    • No Data Available

    • Announced onEx-Date
      Apr 25, 2014Jul 28, 2014
      Split: Old FV10.0| New FV:2.0
    • No Data Available

    • Announced onMeeting on
      Nov 09, 2020Dec 11, 2020
      -
      Jul 02, 2020Jul 31, 2020
      -
      Dec 10, 2019Jan 11, 2020
      -
      Jul 22, 2019Aug 23, 2019
      -
      Apr 26, 2019Jul 20, 2019
      Book closure from Jul 6, 2019 to Jul 20, 2019

    About

    Axis Bank Ltd., incorporated in the year 1993, is a banking company (having a market cap of Rs 230,819.16 Crore).

    Axis Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2020.

    The Bank has reported Standalone Non Performing Assets (Gross NPAs) at .00 % of total assets and Standalone Net Non Performing Assets (Net NPAs) at .00% of total assets for the quarter ending 31-12-2020.

    For the quarter ended 31-12-2020, the company has reported a Consolidated Total Income of Rs 19,910.93 Crore, down 2.62 % from last quarter Total Income of Rs 20,446.79 Crore and down .33 % from last year same quarter Total Income of Rs 19,975.99 Crore. The bank has reported net profit after tax of Rs 1,317.91 Crore in latest quarter.

    The bank’s top management includes Mr.Rakesh Makhija, Mr.Stephen Pagliuca, Mr.S Vishvanathan, Mr.Rohit Bhagat, Mrs.Ketaki Bhagwati, Mr.Girish Paranjpe, Mr.Pralay Mondal, Mr.Rajiv Anand, Mr.Rajesh Dahiya, Mr.Amitabh Chaudhry, Mr.B Babu Rao. It has Haribhakti & Co. LLP as its auditoRs As on 31-12-2020, the company has a total of 306.15 Crore shares outstanding.

    About Axis Bank

    Axis Bank Ltd., incorporated in the year 1993, is a banking company (having a market cap of Rs 230,819.16 Crore). Show More

    Key Indices Listed On

    Nifty 50, S&P BSE Sensex, Nifty Bank, Nifty 100, Nifty 200

    Address

    'Trishul', 3rd Floor,Opp. Samartheshwar Temple,Ahmedabad, Gujarat - 380006

    Executive Leadership

    AK

    Akshaya Kumar Panda

    President
    AC

    Amitabh Chaudhry

    Managing Director & CEO
    BB

    B Babu Rao

    Nominee Director
    GP

    Girish Paranjpe

    Independent Director
    Show More

    Auditors

    Haribhakti & Co. LLP

    Axis Bank Share Price Update

    Axis Bank Ltd. share price moved up by 3.10% from its previous close of Rs 731.25. Axis Bank Ltd. stock last traded price is 753.95

    Share PriceValue
    Today/Current/Last753.95
    Previous Day731.25

    DATA SOURCES: TickerPlant (for live BSE/NSE quotes service) and Dion Global Solutions Ltd. (for corporate data, historical price & volume, F&O data). Sensex & BSE Quotes and Nifty & NSE Quotes are real-time and licensed from BSE and NSE respectively. All timestamps are reflected in IST (Indian Standard Time).

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    Markets Data

    *

    Key Metrics

    • This is a ratio arrived at by dividing the current market price of a stock by its latest (annual or annualized) earnings per share. Here we have taken the TTM (trailing twelve months) adjusted earnings per share.

    • Earnings per share (TTM) tells the profit after tax earned on a per share basis by a stock over the last twelve months or four quarters.

    • MCap or Market capitalization of a stock is calculated by multiplying the total number of shares outstanding of that particular stock with its current market price.

    • This is the ranking of a company within its sector based on MCap or Market capitalization. Higher the market capitalization of a company, higher the rank it is assigned.

    • Price to Book represents the ratio of current market price of a stock to its book value per share. The book value itself is arrived at by dividing the net worth of a company by the total number of shares outstanding of the company at that time.

    • Dividend Yield calculates the amount of full year dividend declared by a company as a percentage of the current market price of a stock. All other things being equal, higher the dividend yield of the stock, the better it is for investors.

    • Face value of a stock is the value ascribed to the stock as per the balance sheet of the company. The dividend declared by a company is usually declared as a percentage of face value.

    • Beta (β) is a measure of systematic risk. It describes the responsiveness of a stock to fluctuations in the market. Beta coefficient of more than 1 denotes that a security is more volatile than its benchmark and less than 0 signifies that security return is not correlated to market movement.

    • Volume Weighted Average Price represents the average price of a security over a particular time period (example one trading day) weighted by the volume traded at each price point.

    • This represents the 52 week high and low price of the security. It is also the 1 year high and low of the security. This represents the highest and lowest price touched by the security during the past 52 weeks or 1 year including today.

    • Book value represents the value arrived at by subtracting the total liabilities from the total assets of the company. On dividing this value with the total number of shares outstanding for the company, we can arrive at book value per share. Book value is also known as Net Asset Value of a company.

    • This is a ratio of market capitalisation of a company’s stock to its annual sales. The market capitalization here is taken for the fully paid-up equity share of the company.

    Technicals

    • Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

      Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

    • Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

      Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

    • Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

      Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

    • Pivot points are indicative support and resistance levels which are calculated on basis of previous day’s high, low and closing prices. Pivot level for Monday’s trade would be based on Friday’s prices and Monday’s, high, low and close price would go into calculation of pivot levels for Tuesday’s trading session.

      There are two underlying assumptions in pivot points. First, the specific price level indicated by R1, R2 and R3 may act as a barrier or resistance in an uptrend. So, if a stock moves up above these pivots levels, the uptrend gets confirmed. Second these specific price levels may see an increased activity, hence may be used as levels to book profit by traders with a long positions. For traders with short position, these points are often helpful in determining what should be the stop loss for a trade.

      Similarly, in case of support levels as indicated by S1, S2 and S3, they may act as price level where a stock might get a breather when it is slipping southward. In case these supports levels are broken it is a confirmation of a down trend. The stock may also see increased activity close to pivot levels. They may be used by trader may use them to put stop loss for a long trade. If a trader has short position, the pivot level may help in determine a level, where profit may be booked.

      Like any other technical indicator, pivots levels cannot and should not be used as single factor while taking a trading decision. They should be combined with other technical indicators. It could be short term moving averages, stochastic, moving average convergence divergence (MACD) or overbought level as indicated by relative strength index (RSI). For example, if a breakdown of support level (S1, S2 or S3) is accompanied with stock price also moving below its short term moving average or stochastic on daily charts giving a sell signal, it would add to weightage to the decision of taking a short trade.