Nifty Bank on Friday took out its previous high of 41,840 to hit a fresh high of 42,345.50 after a consolidation of nearly two months. From the past one-month, the index was making a higher high- lower Low formation that indicates strength. It is also trading above a 21-day moving average.
The immediate support for the index has shifted to 41,300-41,500 range while the resistance is placed at 43,000. A momentum indicator relative strength index (RSI) and MACD are showing a positive setup.
Nifty Bank managed to claim a new high, as the HDFC twins outperformed.
Among private banks, we expect HDFC Bank and Axis Bank would be frontrunners. While in the PSU banking pack, Canara Bank, SBI and Bank of Baroda could muscled up in the coming week.
Nifty Bank November futures are trading at a premium of 158 points. The distribution of Nifty Bank Put options open interest (OI) suggests the 41,000-strike has the highest OI concentration, which may act as support for the ongoing expiry.
Nifty Bank Call strike of 43,000, followed by 43,500, witnessed significant OI concentrations and may act as resistance for the current expiry.
Nifty Bank topped the 42,000 mark for the first time, ever as the bulls raged on Dalal Street, powered by a much-awaited ease in US retail inflation. The overall structure of Nifty Bank remains bullish for the coming days.
After a sustained increase, the market may experience some consolidation, as investors would book some profits at higher levels. The best course of action would therefore be to continue taking tiny profits while maintaining a trailing stop loss, as long as the index remains above the 40,300 level.
(The author is Executive Director at Choice Broking)