SBI, Canara Bank, ICICI Bank and HDFC Bank: 4 banking stocks to watch this week

Nifty Bank made a high of 41,791.90, before closing the week at 41,559.40, up 0.14 per cent. The banking index formed an indecisive Doji candlestick pattern on the weekly chart.

On the daily chart, the index stayed above its 100-EMA, which would now be acting as an important support level.

A momentum indicator RSI stood at 47 level while the MACD was positively skewed. Among private banks, we expect ICICI Bank and HDFC Bank could be frontrunners. Among PSU banks, SBI and Canara Bank may reveal some expansions in the coming week.

Nifty Bank’s February futures traded with 85.60 points premium.

Nifty Bank Put options distribution shows that the 41,000 strike, followed by 40,500, have the highest open interest (OI) concentration, which may act as support for the current expiry.

Nifty Bank Call strike price of 42,500, followed by 43,000, witnessed significant OI concentrations and may act as resistance for the current expiry.

The index has traded in a very narrow range in the past week, which suggests some indecisiveness among call and put writers. Simultaneously, the volatility Index has been slowed down, which led to shrink premium price. This suggests the bulls could dominate in the coming few weeks.  The index is consolidating in a price range and it would catch up once it sustains above 42,020 levels.

A strong base is placed at the 41,000 level. Banking stocks were responsible for holding back the Nifty, as there was fatigued in most Nifty banking counters. It appears that some sort of correction or a fresh injection of momentum is required.

The market sentiment remains unclear due to uncertainty over the rate hikes and the economic growth. Foreign portfolio investors (FPIs) have been strongly selling in the financial sector. It is now time to review one's portfolio to see what can be added or reduced.

(The author is Executive Director at Choice Broking)

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