Capitec Bank Holding Limited’s shares (JSE: CPI) are poised for a third consecutive session of gains to begin the week. Notably, the stock has shown resilience with a year-to-date appreciation of 3.2% and an impressive 18% surge over the past 52 weeks. In recent developments, Capitec Bank declared a half-year dividend of 488.22 cents per non-redeemable, non-cumulative, non-participating preference share, reinforcing its commitment to shareholder returns.
Capitec Bank faces a challenging economic landscape in 2024. Preliminary information hints at mixed financial performance, with normalized profit expected to remain stable despite potential revenue challenges from rising interest rates and a slowing economy. While the company is yet to announce a dividend for 2024, it maintains a focus on operational efficiency, customer base growth, and diversification into wealth management and insurance.
Technical Analysis
The daily chart shows that Capitec Bank currently trades within an ascending channel, exhibiting a bullish bias as the price sits comfortably above the key Simple Moving Averages (SMAs) – the 50-SMA (blue line), 100-SMA (orange line) and 200-SMA (red line). This suggests a positive long-term trend. The upward-sloping 50-SMA recently crossed above both the 100-SMA and 200-SMA, further strengthening the bullish momentum. Moreover, the RSI (56.63) recently broke above 50, indicating increasing buying pressure.
Therefore, short-term trading opportunities could arise if the price action maintains its push above the SMAs, potentially reaching the 18-month high of R2,120.00. A successful bridge of the initial resistance on significant volume could trigger a run, with the R2,193.67 and the 31st of May 2022 high of R2,274.09 acting as the next significant levels higher.
However, failure to sustain a push higher could find significant support at the 23.60% Fibonacci retracement level (R2,001.06). A break below the initial support on significant volume would leave the 38.20% Fibonacci retracement level (R1,927.48) and 50.00% Fibonacci retracement level within the bears’ reach in the near term.
Summary
Capitec Bank Holding Limited showcases resilience amid market uncertainties. With a solid technical outlook, sustained bullish momentum could lead the stock towards significant resistance levels at R2,193.67 and R2,274.09. Conversely, a failure to maintain upward momentum might find support at the 23.60% Fibonacci retracement level of R2,001.06, with further downside potential to the 38.20% Fibonacci retracement level at R1,927.48.
Sources: TradingView, Trading Economics, MarketScreener, Reuters, Capitec Holdings.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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