SBI And Swing Trade Setup: Riding the Bear?

A confluence of fundamental concerns and bearish technical signals suggests a potential short-term downtrend for State Bank of India (SBIN) stock. Recent incidents like customers reporting negative account balances could negatively impact investor confidence. A broader bearish trend in the domestic equity market might also exert downward pressure on SBIN. 

Concerns regarding SBI's fundamentals include a decrease in promoter holding, high interest payments relative to earnings, and a shortfall in credit and deposit growth, leading to a declining operating profit. Notably, Incred Equities downgraded SBIN to 'Hold' due to concerns about the sustainability of its return on equity and lower recoveries from written-off accounts.

Goldman Sachs issued a 'Sell' rating, citing peaking return on assets, valuation derating, lower loan growth expectations, and an anticipated increase in credit costs. The latest quarterly results showed a quarter-on-quarter decrease in net profit and a low interest coverage ratio. The broader banking sector faces pressures on net interest margins and liquidity challenges. Regulatory changes by the RBI and a potential slowdown in India's GDP growth due to US tariffs could also act as headwinds.

Technically, the stock exhibits bearish signals such as weekly stochastic and MACD crossovers, a downward price breakout below support, the formation of a double top near resistance, a bearish channel breakdown, the emergence of bearish candlestick patterns, and high trading volume on down days.

The stock has been oscillating inside a bearish regression channel which sometimes creates "Sell on rise" price structure and presents opportunity for swing trades, The current price action suggests a similar opportunity with key levels of entry and target marked in the chart.  

Sudhanshu