Bank Nifty may rise to 48,000 on momentum rally after taking 1,600-pt leap to record high

The ongoing momentum rally, according to analysts, may push Bank Nifty to 47,000-48,000 levels

After making a fresh new high on December 4, all eyes are on Bank Nifty’s next move now. The banking index jumped 1,617 points on December 4 to hit a record high at 46,484.45, supported by ICICI Bank, State Bank of India (SBIN), Kotak Bank, Punjab National Bank (PNB) and IndusInd Bank. The ongoing momentum rally, according to analysts, may push the index to 47,000-48,000 levels.

Banking sector to lead new bull phase

“The assembly election outcome is fueling fresh optimism for a new bull phase in the market and a stable political environment could further boost investors’ confidence and drive the markets higher, with the continuation of policy. Banking being the mother of all sectors would be the first to take the lead in the new bull phase in the market,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

Also Read: Why Nifty, Bank Nifty hit new all-time highs; what brought biggest single day gains since Oct'22

Bank Nifty support at 46,000-45,800; resistance at 47,000-48,000

Bank Nifty bulls made a strong comeback, surpassing the all-time high levels and dispelling the bearish sentiment. “The momentum is anticipated to persist, with robust support identified at the 46,000-45,800 zone, serving as a cushion for the bulls. The ongoing momentum rally has the potential to propel the index higher towards the levels of 47,000-48,000," said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

"Nifty Bank is slightly bullish but also very overbought on the Daily charts with the next resistance at 47,480. Investors should book profits at current levels as a Daily close below support of 46,430 could lead to a fall till 44,900 in the near term," said AR Ramachandran of Tips2Trade.

Banking sector  expected to outperform in the medium-to-long term

The strong gains the market saw yesterday were anticipated after state election results suggested a strong performance by the ruling dispensation at the centre in the general elections next year, signalling political stability and continuity of economic reforms over the next 5 years.

“Banks being a key driver as well as the beneficiary of general economic growth, the sector is expected to be an outperformer in the medium-to-long term. Attractive valuations of banks and the quality of their balance sheet add to their appeal,” said Sunil Shah, Group CEO and MD at Khambatta Securities.

Last month, banking indices were under pressure after the Reserve Bank of India (RBI) tightened norms for personal loans and credit cards. The market sentiment turned negative on November 17 after top banking and non-banking finance names including Bajaj Finance, HDFC Bank, ICICI Bank, Axis Bank, RBL Bank and SBI Card crashed up to 10 percent as RBI raised capital requirements to check the unbridled growth in the unsecured loan segment.

Also Read: Gainers and Losers: 10 stocks that moved the most on December 4

Since the RBI’s announcement, Bank Nifty has gained over five percent in just 12 trading sessions. The index has gained 7.5 percent year-to-date, underperforming the Nifty 50, which has jumped 13.6 percent in the same period.

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