Nifty Bank made an intra-week high of 42,622.75 before ending the week at 42437.45. With this, the banking index managed to close above last week’s closing level.
On the weekly chart, the index remains well above its 21-day moving average and will act as an important support.
Momentum indicators RSI and MACD are both in the positive zone. Among private banks, we expect Kotak Mahindra Bank and ICICI Bank to be at the forefront. While PSU banks like SBI and Canara Bank are still in a strong position and may give some gains in the coming week.
Nifty Bank November futures are trading at a premium of 67 points. On the options side, Nifty Bank put option distribution shows that 41,500 level has highest open interest (OI) concentration followed by 42,000 level, which may act as support for the current expiry.
Nifty Bank call strike after 43,000, post 43,500, significant OI concentration has been observed and may act as resistance for current expiry.
On the technical side, Nifty Bank is moving in a positive ascending channel with a higher high-higher low structure. After consolidating in the range of 41,400-42,600 last week, it formed a strong base near the 42,000 level.
If the index breaks below 42,000 on a closing basis, we can see a fresh break down. On the other hand, if the 42,700 level is cleared, we could see a new all-time high next week.
Traders can sell some shares of PSU Bank from higher levels. This would be a cautiously positive outlook for the coming week. However, we are currently directly at the top of the spectrum, which we believe will see us test at 44,000-45,000 in the coming year.
(The writer is executive director, Choice Broking)