Nifty Bank Outlook: Further upside possible; ICICI Bank, HDFC Bank, SBI, Canara Bank shares look good

Nifty Bank ended this past week at 43,233.90, up 2.65 per cent. During the week, the bank index reached a low of 42,810.35 and a high of 43,302.05

One of the top gainers for the week was IDFC First Bank, which gained 8.86 per cent. Axis Bank ended the week with marginal loss of 0.49 per cent. The index has currently surged above the support of the 20-DMA, forcing the bears to remain on the sidelines. 

Nifty Bank May futures are trading at a discount of 3.8 points.

Nifty Bank Put options distribution shows that the 42,000 strike has the highest open interest (OI) concentration, which may act as a support for the current expiry. Bank Nifty Call strike of 44,500 followed by 44,000 witnessed significant OI concentrations and may act as resistance for the current expiry. 

The weekly RSI has also crossed the 60-level to settle at 61. The weekly MACD has given a bullish crossover, indicating the bulls having an edge over the bears. In addition, the ADX weekly positive DMI crossed the negative DMI, which suggested bullish momentum on the index. CNX PSU BANK has given a weekly close above the 20-MA. The CNX PSU Bank has successfully managed to close above the resistance 4,045 level.

Besides, private banks such as ICICI Bank and HDFC Bank could lead the index on the upside. Among PSU banks, Canara Bank and SBI can hold the command. Technically, the Nifty Bank continued its upward trend of higher highs and lower lows and made a bullish candle on the daily charts, while it also continued its upward trajectory of higher tops and lower bottoms for the fifth consecutive week on the weekly scale formed a bullish candlestick pattern.

Volatility has fallen dramatically, giving the bulls more comfort. The fear index India VIX has been on its lowest levels since December 2019. Global stocks ceded earlier gains as data showing economic resilience and persistent inflationary pressures cemented expectations of further interest rate hikes in the US and Europe.

Nifty Bank started the month with a relatively high OI base.  Going forward, Indian equities are on track to end the month 9.2 per cent higher, as corporate results have lifted investor sentiment of pausing of Interest rate by RBI.

(The author is Executive Director at Choice Broking)