Nifty Bank can see significant upside; ICICI Bank, Axis Bank, SBI, BoB and Canara Bank may do well

Nifty Bank made intra-week high of 44,095.25, before settling last week at 44,018. The index closed the week with 0.06 per cent gain. It formed a bullish candle on the weekly chart.  On the daily chart, the index is sustaining above 50-EMA, which would be acting as an important support level. The RSI stood at the 63 level while the MACD was skewed on the positive side. Among private banks, ICICI Bank and Axis Bank could be a front runner. In the PSU banking space, SBI, Canara Bank ana Bank of Baroda may reveal some expansions in the coming week.

Nifty Bank June futures traded with a 76-point premium.

Nifty Bank Put options distribution shows that the 43,500 strike, followed by the 43,000 strike, have the highest open interest (OI) concentration, which may act as support for the current weekly expiry. Nifty Bank Call strike price of 44,500, followed by 45,000, witnessed significant OI concentrations and may act as resistance for this expiry.

Nifty Bank has traded in a very narrow range in the past week, suggesting some indecisiveness among Call and Put writers. Simultaneously, the volatility index has been slowed down, which led to shrink in premium price. 

Nifty Bank’s rollover stood at 78.41 per cent against 81.67 per cent.  The key reason why Nifty Bank has remained underwhelming is the short build in HDFC Bank. The area around the index's all-time high of 44,152 had proven to be a barrier.

A clear breakout over the 44,200 level has the potential to start a significant upward surge.  On Monday, the index hit a high of 44,458.95.

The volatility index, on the other hand, has been steadily declining this month and is now hovering at 12.52 per cent. Based on the statistics above, we can expect a quick sprint in VIX with a low India VIX, indicating a chaotic market.
(The author is Executive Director at Choice Broking)