Nifty Bank made a weekly high of 41,677, before settling the week at 41,258.45. Despite this, the banking index managed to close above its previous week’s closing. On the weekly chart, the index is sustaining above its 50-period moving average and the level may keep acting as support.
On the daily chart, the index is trading in a defined range and holding the immediate support of 40,350. A momentum indicator relative strength index (RSI) and MACD remain in the neutral zone.
Among private banks, we expect HDFC Bank and Axis Bank would be front runners. While among PSU banks, SBI and Bank of Baroda may exhibit some gains in the coming week.
Nifty Bank November futures are trading with a premium of 197 points. The open interest (OI) distribution of Nifty Bank Put Options suggests that the 40,000-strike has the highest OI concentration, which may act as support for the forthcoming expiry.
Nifty Bank’s 42,000-strike Call, followed by 42,500, witnessed a significant OI concentration and may act as resistance for the current expiry.
Nifty Bank is moving in the upward channel for the past month, but now has hit a congestion zone and is not able to break 41,800 on the upside.
Nifty Bank is relatively weak as it is making lower lows. The index has a supply zone of 41,600. On a weekly basis, Nifty Bank is taking support at around the 40,800 level, which is also a confluence level. Unless and until the 41,850 level is taken out, there will be supply in Nifty Bank.
The market may witness some consolidation to profit booking at higher levels after the recent rise. Therefore, the best strategy for the coming days would be to keep booking small profits, with trailing stop loss, as long as Nifty Bank holds 40,300 level.
(The author is Executive Director at Choice Broking)
