Nifty Bank made a high of 41,032 on the weekly chart, before closing at 40,784.05 on Friday. The banking index has managed to give a breakout of its falling trend line on the weekly chart. A sustenance of the 50-day moving average reflects bullishness.
On the daily chart, the banking index is showing higher high-low formation, which is in sync with the trend. A momentum indicator relative strength index (RSI) and MACD both have shown positive crossovers. Also a middle Bollinger Band on the daily chart confirms the remaining head for upside rally.
However, the market may witness some consolidation after the successive rise. That would be healthy. Since all the private banks are now aligned to the market trend, heavyweight stocks such as HDFC Bank, Axis Bank, and Kotak Mahindra would drive the momentum further for the next upside rally.
Nifty Bank futures ended Friday’s session at 40,854.20, which is at 70 points premium, suggesting the bulls are active. Nifty Bank Put option open interest (OI) distribution shows that the 40,000-strike have the highest OI concentration, followed by 39,500 strike that will act as support for the index in the ongoing expiry.
Nifty Bank Call strike of 41,000, followed by 41,500, witnessed significant OI concentrations and may act as resistance in the ongoing expiry. Nifty Bank PCR closed at 1.13.
Therefore, the best strategy for the coming days would be to buy on dips as long as the bank index trades above 40,100 levels.
The author is Executive Director at Choice Broking