Bank Nifty lost steam on November 21, snapping a two-session gaining streak as investors have resorted to profit booking at elevated levels. This comes after the index hit fresh record highs for consecutive sessions, buoyed by positive sentiment and strong earnings.
The index fell nearly 0.9 percent to 58,833 earlier during the day. Analysts have advised key levels investors should watch out for.
Longest weekly winning run since June:
The previous gains recorded by Bank Nifty during the ongoing week significantly outperform today's losses. The index is still in the green on a weekly basis, being up more than 0.5 percent so far.
The index has closed in the green for the past three weeks starting from October 27. If the index holds this week's gains till the end of the trading session, this would mark the longest weekly winning run recorded by the index since early June.
The strong gains recorded by the index were aided by stable results from key constituents such as HDFC Bank and State Bank of India (SBI). The index hit a record high of 59,440.10 on Thursday, outperforming benchmarks who are still slightly away from their all time high levels.
Analysts told Reuters that they expect banks' credit growth to improve due to demand uptick following RBI's rate cuts. They see stable asset quality as a positive for lenders. Additionally, relatively cheaper valuations in banks compared to other sectors and moderating foreign selling are also aiding the rally, say analysts.
The Nifty Bank index is up nearly 16 percent this year so far, as against Nifty 50's 10 percent rise during the same period of time.
Top losers on Bank Nifty today:
Canara Bank was the top loser on the index today, falling more than 1 percent to trade at Rs 146.37 apiece, as seen at 1.10 pm. ICICI Bank, Punjab National Bank (PNB), Bank of Baroda, HDFC Bank and Axis Bank shares meanwhile fell between 0.5 percent and 1 percent each.State Bank of India (SBI) and AU Small Finance Bank shares were trading in the red with marginal losses.
Bucking the trend, IndusInd Bank shares jumped over 2.5 percent to trade at Rs 850.40 apiece. Kotak Mahindra Bank, IDFC First Bank and Federal Bank shares were trading in the green with marginal gains.
Nifty PSU Bank index was down 0.99 percent, while Nifty Private Bank index fell 0.31 percent, as seen at 1.40 pm.
Technical view on Bank Nifty:
Frontline banking stocks like HDFC Bank, ICICI Bank, and Axis Bank are showing signs of gaining strength to pull the index further in the coming days, with targets of 60,500 and 63,000 expected, PL Capital said. "The index would need to sustain the important support positioned near the 50EMA zone at the 57200 level to keep the overall trend intact, with the sentiment getting better," it added.
The domestic brokerage placed the first support level at 59,169 and second support at 58,990, while resistance was placed at 59,483 and 59,619. Notably, at its day’s low, Bank Nifty had broken both the support levels.
"Key support is identified at 59,000–59,200, while resistance is positioned at 59,500–59,700, and a breakout beyond this range may accelerate the upward trajectory," said Amruta Shinde, Research Analyst at Choice Broking.
'Bank Nifty's recent candles show strong underlying demand':
Bajaj Broking meanwhile said that Bank Nifty's recent candles show steady buying with shallow intraday dips being absorbed quickly, indicating strong underlying demand. The index is also comfortably trading above key short-term moving averages, reinforcing the ongoing bullish sentiment, it said.
"Going ahead, the trend remains firmly positive with the index poised to test the 59,800–60,000 zone in the short term. Any minor pullback is likely to find support around the 58,800–58,600 band, which now acts as an immediate demand zone. Unless this support breaks decisively, the overall structure continues to favour further upside," the brokerage added.
'Short-term and broader outlook remains bullish':
Vatsal Bhuva, Technical Analyst at LKP Securities, had advised caution after the index continuously charted new record highs. "Bank Nifty formed a small candlestick on Thursday's session, with RSI rising to 74 on the daily chart, indicating the need for a short-term cautious stance. Fresh long positions should be considered only above 59,500 or on dips toward 58,800 for a favourable risk-reward setup, though the short-term and broader outlook remains bullish. In derivatives, massive put writing was observed, strengthening support at 59,000 on an immediate basis and 58,800 on a positional basis, while resistance levels are placed at 59,500 and 60,000," he added.
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(With inputs from Reuters)
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