After a volatile past month, the National Australia Bank Ltd (ASX: NAB) share price has continued to travel upwards.
At yesterday's market close, the banking giant's shares finished 1.38% higher to $30.13. This represents a 20% rebound from its year-to-date low of $25.43 on 17 June.
There's been a general recovery in the S&P/ASX 200 Financials (ASX: XFJ) sector as investors become more tolerant of negative news.
For context, the benchmark financial index is up around 12% over the same time frame.
What happened to NAB shares?
Despite the company not releasing any price-sensitive news since the launch of its capital notes offer, the NAB share price has made a spectacular comeback.
Another aggressive rate hike by the Reserve Bank of Australia (RBA) to cool down inflation spooked investors last month. This caused negative sentiment in the market, dragging down ASX shares for weeks.
However, after being heavily sold-off throughout early to mid-June, it appears investors started to see NAB shares as too cheap to pass up.
NAB's relative strength index (RSI) has fallen to a low of 16. The last time that happened was during COVID-19.
The RSI is a momentum oscillator that is used to assess the strength or weakness of a share price. Normal levels range between 30 and 70. Anything outside that range is an indication that the share price is an attractive buy or too expensive.
Subsequently, the NAB share price has recovered lost ground despite many economists tipping another 0.5% hike in the official cash rate to 1.85%, according to Bloomberg.
It seems investors have already priced in this possibility ahead of the RBA's next meeting on 2 August.
Data released by the Australian Bureau of Statistics yesterday shows the consumer price index (CPI) rose by 1.8% in the June quarter. Inflation is now running at 6.1% per annum, which is the fastest pace in 20 years.
Is now the time to buy?
Last month my Foolish colleague James reported that Macquarie was retaining its outperform rating on NAB with a share price target of $34.
Its analysts believe there is still more upside in NAB shares regardless of rising interest rates. Based on the current share price, this implies an upside of about 13% for NAB investors.
Last month Goldman Sachs also maintained its buy rating on NAB with an improved price target of $34.26.
The team is confident that NAB's balance sheet mix provides the best exposure to domestic system growth over the next 12 to 18 months.
NAB share price review
While the NAB share price has moved in circles over the past 12 months, investors are sitting on a modest return of 15%.
The share price touched a multi-year high of $33.75 on 21 April and is not far off from achieving that feat again.
The ASX bank share has a price-to-earnings (P/E) ratio of 14.93. It commands a market capitalisation of roughly $94.53 billion.
