Nifty Bank outlook: Index support at 42,900; all eyes on shares of HDFC Bank, ICICI Bank, SBI, BOB

Nifty Bank hit a high of intra-week high of 43,739.80 but closing the week at 42,661.20, down 1.32 per cent.

On the weekly chart, the index formed a ‘Dark Cloud Cover’, which indicates a shift in the momentum to the downside. On the weekly chart, the index formed a bearish candle. The index has traded flat to positive for the week but lost all the momentum on Friday. The fall on Friday was led by HDFC Bank, which fell about 6 per cent on Friday.

If Nifty Bank moves further lower, HDFC Bank will fall more compare to other banks, as the stocks looks technically weak after gap down on Friday. If the index recovers from support, ICICI Bank and Kotak Mahindra Bank can lead on higher side. Among PSU banks SBI and Bank of Baroda will lead the rally on higher side.

Nifty Bank May futures traded with 51 points premium. The open interest (OI) distribution for Nifty Bank Put options shows that the 42,000 strike has the highest concentration, which may act as support for the current expiry. Nifty Bank Call strikes of 43,000 and 43,500 saw significant OI concentrations and may act as resistance for the current expiry.

Nifty Bank has strong support at 42,900 levels and if the index breaches that level, it can further fall towards the 41,200 level. Nifty Bank has strong resistance near the 43,700-43,900 range. If the Nifty Bank closes above the mentioned resistance level, the breakout could take it towards the all-time high levels of 44,150 and above.

(The author of this article is Executive Director at Choice Broking)