Extending the winning streak into the fourth consecutive session, the Nifty Bank index ended at its record closing high of 44,072.10, up 0.64 per cent, with shares of Bandhan Bank (up 3.04 per cent), Bank of Baroda (up 2.97 per cent) and IDFC First Bank (up 2.06 per cent) as the top gainers on May 15.
The index touched its intraday high of 44,151.70 which is just 0.10 points below its all-time high of 44,151.80 hit on December 14, 2022.
Analysts believe the banking index may rise even to the level of 45,500 soon if the index sustains the 44,150 mark. However, the sharp gains may attract some profit booking too.
Banking stocks have been gaining as the market sentiment remains upbeat due to healthy macroeconomic prints, a pause in rate hikes, sustained foreign capital inflows and healthy March quarter numbers of banking majors.
Read more: Bank Nifty touches all life-time high. Which stocks should you buy today?
While fundamentals look favourable, we need to understand what technical charts are indicating for the Bank Nifty. Mint talked to technical analysts to understand what is the near-term outlook for Nifty Bank. Here’s what they said:
Rajesh Palviya, SVP – Technical and Derivatives Research, Axis Securities
Technically, if we observe last month’s closing along with the RSI crossover, the indication was clear that the current momentum in Bank Nifty is all set to make a new high. The rally can extend towards 44,500- 45,000 in continuation of this uptrend.
Bank Nifty has strong support at 43,000- 42,500. From a derivative standpoint, Bank Nifty futures in current expiry (May expiry) has witnessed an increase in total open interest by 17 per cent, with price gain suggesting a long build-up further augments the bullish view.
Hence, traders can buy Bank Nifty from current levels with an appropriate risk-reward ratio, while investors can focus on stocks like AU Small Finance Bank, ICICI Bank, SBI, IDFC First Bank and IndusInd Bank, which have given good breakouts on monthly charts.
Mehul Kothari, AVP – Technical Research, Anand Rathi Shares and Stock Brokers
Till a few sessions back, 43,000 – 43,500 seemed to be a strong hurdle for Nifty Bank but the index has surpassed it. In fact, the index almost made a new life high near 44,150.
However, we are witnessing a negative divergence in daily RSI. In addition, we compared the price of Bank Nifty futures with the volumes. We observed that the recent rise is accompanied by very low or declining volumes. Going ahead, a close above 44,150 might extend the move towards 45,000 but that should be used to exit longs.
Arvinder Singh Nanda, Senior Vice President, Master Capital Services
The Bank Nifty index has crossed above the key psychological mark of 44,000 for the first time this year and is now gearing up to approach the all-time high of 44,151.80 made last year in December.
This surge in prices is attributed to growing fundamental tailwinds in major heavyweight components. While the ongoing sentiments are quite bullish, it is important to note that prices are currently trading near their all-time high, and therefore, the possibility of a correctional fall cannot be ruled out.
The expected support level for such a correctional fall is around 43,750, where a fresh round of buying can be witnessed. On the higher side, if prices manage to move above 44,152 with a daily closing basis, then the next resistance level will align around 44,500-45,000.
Rahul Ghose, Founder & CEO – Hedged, an algorithm-powered advisory platform
The Bank Nifty Index open interest (OI) data today quickly shifted from the highest call writers at the 44,000 level to the highest put writers being at the same level. In fact, even for the May monthly expiry, the 44,000 put writers gained momentum through the day.
The strength in the Bank Nifty Index is likely to sustain as any correction from this point as well will meet with buying pressure.
There is a demand zone between 43,500 and the 42,800 level on Bank Nifty. This demand zone also coincides with the 20-day exponential moving average as well and hence is a good level for those who have missed the bus on this rally.
Another evidence for the sustenance of the up-move comes from the fact that the quantum of puts sold for both May and June expiry is higher than that of the number of calls sold. All these points hint towards the likely strength to continue and a buying atmosphere to prevail.
Rupak De, Senior Technical Analyst at LKP Securities
The decent addition in the 44,000PE suggests that there is strong support at 44,000. However, a decisive fall below 44,000 could potentially trigger panic in the banking sector.
On the other hand, a decisive move above 44,152 might propel the Bank Nifty towards the 44,500 level. The key support levels to watch out for are 44,000 and 43,700.
Rohan Patil, Technical Analyst, SAMCO
Bank Nifty on the daily chart has kissed near its lifetime high levels and the index has shown a smaller degree V shape reversal on the daily timeframe. Bank Nifty bulls continued to hold their long positions and the intraday dip was utilized to maintain strength.
Similarly on the daily timeframe too, prices witnessed a breakout above the trend line and prices were continuously playing above its 9 & 21 EMA.
Will still consider buying the banking index at these levels as prices are trading above its short- and medium-term EMA.
After the Nifty Bank index breached its 44,000 hurdles, speculations are rife about whether it would be able to climb a new peak surpassing its current lifetime high of 44,151.80 levels. The immediate resistance for the index is at 44,500 and the downside support is at 43,500.
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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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