Nifty Bank made an intra-week high of 40,690.05, before eventually settling last week at 39,598.10. The index was down 2.19 per cent for the week. On the weekly chart, Nifty Bank formed a bearish candle; it failed to close above 20- and 50-Day MAs.
The Bollinger band indicates that the index has closed on the edge of lower band, suggesting weakness in the broader Index. While a sub-45 level RSI value signifies a lack of strength. Indicators such as ATR and ADX remained on the weaker side on the daily chart. However, short term buying opportunities are likely in the private banking stocks.
Last week, IndusInd Bank lost 10.86 per cent while no banking stocks settled higher. Bank Nifty February futures traded with premium of 236 points while PCR remained at 0.83 level.
Nifty Bank Put options distribution suggests that the 39,000 strike, followed by 38,000, has the highest open interest (OI) concentration, which may act as support for the current expiry. The Nifty Bank Call strike of 41,000 witnessed significant OI concentrations and may act as resistance for the monthly expiry.
The index is trading forming a lower high-low for a couple of months now. Benchmark Indices would catch upside directional movement once the index sustains above 41,500.
Nifty PSU Bank index ended at 3,681.95, as it would be on a weaker side if it closes below 3,500 level. It would be suggested that traders should not be going with aggressive long positions.
Long-term investors can accumulate high-quality banking stock at these levels, while short-term traders should trade in smaller quantities to protect their capital.
The fallout from Silicon Valley Bank, Signature Bank, and Credit Suisse is also prompting raders to be concerned about the strength of the US and European financial sector.
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