Nifty Bank outlook: Buy on dips; SBI, Bank of Baroda shares may do well

Nifty Bank has continued to show increased buying interest. It successfully broke out of a consolidation on Friday and sustained this upward momentum. Notably, For Bank Nifty, it has crossed the 50-day SMA after a long time, which is largely positive. It has also formed a higher high higher low formation, which supports further uptrend.

The momentum indicator Relative Strength Index (RSI) is currently indicating strength and is trading near the 73 level. For positional traders, the support zone lies in the range of 45,400-45,500. A move above this level could lead to a rally towards 45,700-46,000. In the PSU banking sector, stocks such as SBI and Bank of Baroda are anticipated to rise and offer decent gains this week.

As of now, Nifty Bank September futures are trading at a premium of 163 points compared with the Nifty Bank spot price.

Regarding options, the open interest (OI) distribution for Nifty Bank Put options highlights the highest concentration at the 43,500 level, which may serve as a support level for the current expiry. On the Call side, OI concentrations are notable at the 44,600 and 45,500 strikes, indicating potential resistance for the current expiry.

It is advisable for traders and investors to consider buying opportunities on dips in Nifty Bank, while maintaining a suitable stop-loss below the mentioned support levels.

(The author is Executive Director Choice Broking)

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