Nifty Bank Outlook: Buy on dips; immediate index support at 43,800-43,500 levels

Nifty Bank has displayed a sustained increase in buying interest. The price precisely reversed from the bottom of the trendline but the buying pressure does not appear to be overly strong, as there is a price gap accompanied by a neutral candlestick pattern.

At present, Nifty Bank seems to be trading within a range of 44,000-43,800, indicating a period of sideways consolidation. If the price manages to break above the resistance of 44,500, on can anticipate that Nifty Bank to experience a pullback to the range of 44,800-45,000 in the short term. In the event of a dip in price, it should be considered as a buying opportunity.

It's noteworthy that Nifty Bank has recently crossed both the 200-day and 100-day Exponential Moving Averages (EMAs), which is a positive signal. Additionally, it has formed a higher high and higher low pattern, reinforcing the potential for an ongoing uptrend.

The Relative Strength Index (RSI) momentum indicator is currently showing strength and is trading near the 44 level. For positional traders, the support zone is identified within the range of 43,800-43,500. A breakthrough above this level could lead to a rally towards 45,000-45,500.

Nifty Bank September futures traded at a premium of 149.60 points compared with the Nifty Bank spot price.

Regarding options, the open interest (OI) distribution for Nifty Bank Put options reveals the highest concentration at the 44,300 level, which may act as a support level for the current expiry. On the Call side, significant OI concentrations are observed at the 45,000 and 45,500 strikes, suggesting potential resistance levels for the current expiry.

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

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

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