Shares of Citicorp have seemed to ignore gravity in the past 10 days.

While the overall stock market plunged, Citicorp set new highs on hefty volume. In the past 10 days, Citicorp's share price is up about 7%, compared with a 3% decline for the Dow Jones industrial average.

On Thurdsday, the shares were down 25 cents to $20.50< while the Dow Jones industrial average lost 13.64 points to 3,274.12.

Enthusiasm for Citicorp's stock has grown amid a flurry of positive reports from Wall Street.

Executives Raise Profiles

At the same time, the bank's chairman and chief executive, John S. Reed, and its president, Richard S. Braddock, have been in a higher-profile mode, offering more clues about the bank's future direction.

"Citicorp is in the midst of both a cyclical recovery in asset quality and a secular improvement in profitability," said Frank R. DeSantis of Donaldson, Lukin & Jenrette Securities Corp. "That can result in an explosion of earnings per share and the price of Citicorp's stock."

Mr. DeSantis has had a "very attractive" rating on the stock since last September, before it reached its low of $8.75 in December, and recently put it on an "action list" of best investment ideas.

Forecast: $50 in Two Years

The analyst's two-year price target for the shares in $50, giving it more upside potential than any other major bank stock.

Other analysts are more cautious. "The higher it goes, the more lukewarm I get," said Raphael Soifer of Brown Brothers, Harriman & Co.

While the bank's outlook is improving, he noted that Citicorp has lost money on an operating basis for the past four quarters, and its stock thus effectively carries a negative price-to-earnings ratio.

Another concern is whether Citicorp will issue equity and dilute the value of existing shares. "With the stock finally at around book value, you do have to wonder if an underwriting can be far behind," Mr. Soifer said.

Citicorp's book value on March 31 was $21.17 per share.

Relatively Weak Ratios

Citicorp management has denied any plans for an equity offering. But Mr. Soifer noted that the bank continues to lag significantly behind others in capital strength.

The bank's ratio of Tier 1 capital to risk-adjusted assets was 4.06% on March 31, compared with 6.63% for Chemical Banking Corp. and 5.64% for Chase Manhattan Corp.

J.P. Morgan & Co., considered the premier money-center bank, has a Tier 1 capital ratio of 7.06%. NationsBank Corp., Charlotte, N.C., the country's largest superregional bank, has a ratio of 7.1%.

"The fear of an equity offering by Citicorp has no basis in fact because the recovering trend in creeit quality and the permanent improvement in operating efficiency will add more value than a larger shareholder base will take away," according to Mr. DeSantis.

Lesson from BankAmerican

"We learned this lesson from BankAmerica when we were critical of the dilution to come from its dividend reinvestment program," the analyst said.

He noted that while BankAmerica's share base has increased by a third in size since 1987, its stock has move up almost seven times off its low.

"Like BankAmerica," he contended, "no reasonable amount of equity can dilute the upside in Citicorp's earnings power to the point where it becomes a bad investment."

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