ICICI Bank & M&M Chart ‘Death Cross’ for 4th Time in 5 Years: Can History Repeat?

• ICICI Bank and Mahindra & Mahindra (M&M) have both formed a ‘Death Cross’ on their daily charts, marking the 4th occurrence in the past 5 years.
• A ‘Death Cross’ happens when the 50-day moving average (DMA) crosses below the 200-day DMA, usually signaling a bearish trend.
• However, a ‘Death Cross’ pattern doesn’t always predict a sustained downtrend; false signals and trend reversals can occur.

ICICI Bank’s Historical Performance:

• March 2023: The stock formed a ‘Death Cross,’ which was negated by a subsequent ‘Golden Cross’ in May 2023.
• Previous instances:
  • April 2022 to August 2022
  • April 2020 to November 2020
• In these periods, ICICI Bank saw significant gains of 11.4%, 14.1%, and 44.9% respectively.

M&M’s Historical Performance:

• April 2023: M&M saw a ‘Death Cross’ that was later negated by a ‘Golden Cross’ in June 2023.
• Other instances:
  • March 2022 to May 2022
  • August 2021 to November 2021
• During these periods, M&M gained an average of 16%.

Key Historical Exception:

• November 2018: M&M’s ‘Death Cross’ was followed by a dramatic 67% decline, from ₹708 to ₹234, before recovering in July 2020.
• Both stocks have historically overcome bearish implications of the ‘Death Cross’ with notable recoveries. The question remains: Will this time be different?