PSU bank stocks signal strength, may deliver returns in short-term: Sumeet Bagadia

There was a lot of shuffling in the Indian market last week, mostly related to macro-economic data. The US Senate passed US debt ceiling deal, averting a US default.

The Nifty Bank index meandered within a small range of 790 points, ending the week at 43,937.85, unchanged from the previous week. The Nifty Finance Index, however, eked out a 0.27 per cent gain.

Five stocks advanced while seven declined in the  Nifty Bank pack. One of the top gainers in the Nifty Bank index was IDFC First Bank, which jumped 4.37 per cent for the week. ICICI Bank lost 0.72 per cent. The index has moved above the support of the 20-DMA, forcing the bears to remain on the sidelines.  Indicators as RSI and MACD are currently positively skewed on the daily time frame.

Nifty Bank April futures traded with a 137-point premium. Nifty Bank Put options distribution shows that the strike of 43,000 has the highest open interest (OI) concentration, which may act as support for current expiry. Nifty Bank Call strike of 44,500, followed by 45,000, witnessed significant OI concentrations and may act as resistance for the current expiry.  

PSU Banking stocks showed some strength last week and that it is a good time to enter some f the names for short term buying. Among private banks, IndusInd Bank is witnessing buying interest among traders.

India VIX calmed down in the fag end of last week, signaling Put writers have been shifting their position on higher side. Going forward, we believe a close above the 44,500 level would be key for rally ahead. 

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