After four days of losses, the Nifty Bank index jumped by almost a per cent in intraday trade on Saturday, January 20, with a majority of stocks gaining. In the last four sessions of losses, the Nifty Bank index declined over 5 per cent.
Around 11 am, the Nifty Bank index was up 0.64 per cent with nine stocks in the green and three – IndusInd Bank, Bank of Baroda and Federal Bank – in the red.
Shares of AU Small Finance Bank, Bandhan Bank, Punjab National Bank, HDFC Bank, Kotak Mahindra Bank and ICICI Bank were among the top gainers in the Nifty Bank index at that time.
The Nifty Bank index has been volatile of late. On a weekly scale, the banking index has been in the red for the last three weeks. For the current month so far, the index is down about 5 per cent while the benchmark Nifty 50 is almost flat.
Also Read: Rail stocks RVNL, IRFC, IRCON jump up to 15% to new highs; soar up to 75% just in Jan ahead of Budget
A weaker-than-expected December quarter earnings of HDFC Bank triggered a sharp selloff in the share price of the company, dragging the banking index down. Following the Q3 result of HDFC Bank, the Nifty Bank index fell 4.28 per cent on January 17.
Also Read: HDFC Bank recovers after 11% fall in last 2 sessions; what should investors do now?
What should be your near-term strategy for Bank Nifty?
Mandar Bhojane, an equity research analyst at Choice Broking, pointed out that on the daily chart, the banking index reached a low of 45,430.70 and initiated a reversal from this bottom level. Despite this, Bank Nifty is currently maintaining support at the 45,500 level, indicating a degree of price stability.
Bhojane added that on the weekly timeframe, Bank Nifty has successfully closed above the support of the 20-day exponential moving average (EMA). Consequently, there is potential for further upward movement towards the next resistance at 47,000 levels, which represents the 50 per cent Fibonacci retracement level.
Also Read: Paytm share price rises over 3% after Q3 result; what should investors do?
“It is worth noting that Bank Nifty has shown more weakness than the Nifty 50. A key development to monitor is whether the price manages to surpass the 46,400 level. If achieved, this breakthrough has the potential to propel Bank Nifty towards the 47,200 mark in the coming days,” said Bhojane.
“On the downside, the 45,400 level serves as immediate support, offering a buffer against further declines. However, the 45,000 level is crucial support, and a breach below this level could signal increased bearish momentum in the market,” Bhojane said.
Bhojane said the levels of 45,500 and 45,000 could be the key support for the Nifty Bank index while 46,500 and 47,000 could be the key resistance levels for the index for the current expiry.
“Examining the open interest (OI) distribution for Bank Nifty, Put options reveal that 45,500 and 45,000 have the highest concentration, potentially acting as support for the current expiry. On the Call side, strikes at 46,500 and 47,000 show significant OI concentrations, serving as potential resistance levels for the current expiry. It is important to monitor these levels to gauge potential price movements in the Bank Nifty,” said Bhojane.
Jatin Gedia, a technical research analyst at Sharekhan by BNP Paribas expects the Bank Nifty to consolidate and build a base for the next leg of upmove. On the upside, he sees immediate resistance placed at 47,900 – 48,000.
Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said the index encounters strong resistance around the 46,300 mark, posing a significant hurdle for any upward movement.
“Active put writing indicates lower-end support at 45,500; however, breaching this level may intensify selling pressure. Additionally, the index is trading below short-term moving averages, signalling a bearish sentiment in the current market scenario,” said Shah.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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