Banking Accumulation- II

The plot below displays CNX Bank and Nifty.

The plot below displays the relative performance of CNX Bank vs Nifty.

The last update on 25 sep we made a case for positivity in Bank Nifty. The banking sector has given positive performance and relative outperformance since then and is all set to drive Indian equities higher.
The number of total positive signals has increased from 16 to 21, from the last update. Around 80% of the quarterly Jiseki performance rankings are below 50. 23 out of 38 components are below 30 percentile performance rankings. Low rankings suggest that banking stocks remain undervalued and are good BUY.
Recommendations
In the banking sector we recommend  State Bank of Travancore, State Bank of Mysore, Karnataka Bank, Syndicate Bank and Oriental Bank. Kotak Mahindra Bank, Yes Bank and HDFC Bank  are all technically in a BUY mode, in spite of their high P/E ratios. Below we discuss these stocks based on their Jiseki cycle and rankings. The proprietary ranking methodology looks at numerous performance criteria such as price performance, relative out performance, Jiseki rankings etc.
State Bank of Mysore
State Bank of Mysore is ranked 30th based on Orpheus proprietary ranking methodology, which makes it one of the best performer in the sector. The stock has a positive price trend and positive Jiseki cycle since the last 41 days generating approx 4.55% return.
From a quarterly Jiseki performance ranking perspective also the stock is below 20 percentile which suggests that among the BSE 500 stocks State Bank of Mysore is undervalued. The P/E ratio for the stock is 6.4 which is low compared to most of stocks in its peer group.
State Bank of Travancore
State Bank of Travancore is ranked 14th based on Orpheus proprietary ranking methodology. The stock has a positive price trend and positive Jiseki cycle since the last 30 days generating approx 1.45% return.
From a quarterly Jiseki performance ranking perspective also the stock is approx 20 percentile which suggests that State Bank of Travancore is undervalued. The P/E ratio for the stock is 4.9 which is low compared to most of stocks in its peer group and it shows a high dividend yield of 3.7%.
System generated review levels (technical cases)
In keeping up with the tradition of automating technical patterns and levels, here we have modeled resistance and supports based on previous intermediate multi week trend.
To improve signal quality we have modeled review levels based on key resistance and support levels. The entry for ORMI India 30 only happens if the price is either above a key support or above a key resistance.
The review levels are classified with different widths, the widest one is the most relevant, closer to price action and vice versa.
Technical Review
State Bank of Mysore has crossed its resistance level at 515. We can review the stock again if it it reaches its primary resistance at 590.
State Bank of Travancore is above its support level. Price should go up to the resistance level of 645.
Summary
We have 21 running total positive (both Jiseki and price signal positive), 2 running total negative (both Jiseki and price signal negative) and rest neutral (both Jiseki and price signal non-confirming).
Positive (21)
There are 22 components that are positive on both price and Jiseki cycle. In the span of about 45 days of signal holding period, Karnataka bank, Union Bank and J&K Bank are able to generate profit of approx 30.3%, 12.0% and 21.7% respectively. SBI and all its group holdings i.e., State bank of Mysore, State bank of Travancore and State Bank of Bikaner are showing total positive signals.
Negative (2)
There are 2 components that are negative on both price and Jiseki cycle. These are Bank of India and South Indian Bank.
Non Confirming Signals (15)
This leaves us with 15 components that have a non-confirmation between price and Jiseki cycle filters
Enjoy the latest ALPHA BANKING review.
Technical Charts
These are some of the buys we recommend.

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Indexing: The INDIA 30 Orpheus Risk Management Index (ORMI) is based on proprietary algorithm.
The indices values that are disseminated today are broadly based on market capitalization methodology. Market capitalization methodology has been challenged globally for a few broad reasons. 1) As an asset strengthens it is given more weight 2) As an asset weakens it is given lesser weight. This on one side captures momentum but on the other side suggests investors to focus more on growth compared to value. This increases portfolio risk when market growth slows down or reverses, as has been the case since 2007. When markets contract, the erstwhile top performers push into red for extended period of time causing large drawdowns and emotional pain.
The India 30 Index is based on the above extreme reversion idea i.e. outliers tend to reverse, which suggests that investing is about value picking and extremes are prone to reversion. Our Index extends and fine tunes the idea first mooted by De Bondt and Thaler in their 1981 paper suggesting that 3 year worst losers portfolio tends to outperform the 3 year best winners portfolio.
Coverage India: CNX100, BSE500 traded stocks and Indian Indices.
Ayushi has done her masters in economics from Delhi School of Economics and then completed her Post-Graduation in Finance from National Institute of Securities Markets. She completed her graduation in Economics from Lady Shri Ram College. A keen econometrician, Ayushi enjoys financial modeling and risk management.