Nifty Bank Outlook: Buy the dips; HDFC Bank, Axis Bank shares may do well

Nifty Bank hit an all-time high level, before settling last week at 44,747.35, up 2.58 per cent. This was also the record high closing for the banking index.

On the weekly chart, the index formed a Bullish candle and gave a breakout above the previous all-time high of 44,498.60. The bullish momentum will continue, as the index is showing strength on the weekly chart. The RSI momentum indicator is currently trading at 65 level. If the index moves on the higher side, we expect HDFC Bank to outperform the Nifty Bank. Axis Bank can be another frontrunner in the private banking space. Among PSU banks, SBI and Bank of Baroda are expected to move higher and deliver decent gains this week. 

Nifty Bank May futures traded with a 103.15-point premium to the Nifty Bank spot.

The open interest (OI) distribution for Nifty Bank Put options suggests that the 44m500 strike has the highest concentration, which may act as support for the current expiry. Nifty Bank Call strikes of 45,000 and 45,500 saw significant OI concentrations and may act as resistance for the current expiry.

A breakout above the all-time high level of 44,787.10 Bank Nifty can further move towards 45,000 level and above.

A strong support is located around 44,500-44,200 level; if the index closes below the mentioned support, the momentum will shift to downside. It is recommended that traders should buy the dips in Nifty Bank with proper stop loss below the supports mentioned.

Support: 44500-44200
Resistance: 45000-45500
Bias - Sideways to Bullish

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