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Nifty Bank Outlook: A close below 42,000 may attract selling; book profits in PSU banks

Nifty Bank Outlook: A close below 42,000 may attract selling; book profits in PSU banks

Among private banks, we expect Kotak Mahindra Bank and ICICI Bank would be frontrunners. While in PSU banks such as SBI and Canara Bank are still standing strong and may deliver some gains in the coming week.

Nifty Bank November futures are trading with a premium of 67 points. Nifty Bank November futures are trading with a premium of 67 points.

Nifty Bank made an intra-week high of 42,622.75, before closing the week at 42437.45. With this, the banking index managed to close above previous week's closing level.
On the weekly chart, the index is sustaining above its 21-day moving average and that would act as an important support. 
 
A momentum indicator RSI and MACD both are in the positive zone. Among private banks, we expect Kotak Mahindra Bank and ICICI Bank would be frontrunners. While in PSU banks such as SBI and Canara Bank are still standing strong and may deliver some gains in the coming week.

Nifty Bank November futures are trading with a premium of 67 points.

Nifty Bank November futures are trading with a premium of 67 points.  On the options side, Nifty Bank Put option distribution shows that the 42,000 level, followed by 41,500 have the highest open interest (OI) concentration, which may act as support for the current expiry.
 
Nifty Bank Call strike of 43,000, followed by 43,500, have witnessed significant OI concentrations and may act as resistance for the current expiry.
 
On the technical side, Nifty Bank is moving in the positive upward channel with the higher high- higher low formation. After consolidation within the 41,400-42,600 range last week, it built a strong base near the 42,000 level.
 
We might witness a new break down if the index falls below 42,000 on a closing basis. On the other hand, if the 42,700 level is taken out, we can see a new all-time high the following week.
 
Traders may offload some PSU bank stocks from higher levels. It would be a cautious positive approach for the coming week. However, we are currently directly at the top of the spectrum, preparing for what we believe we would test at 44,000-45,000 in the coming year.
 
(The author is Executive Director at Choice Broking)

Published on: Nov 20, 2022, 1:51 PM IST
Posted by: Shubham Singh, Nov 20, 2022, 1:42 PM IST