Nifty50 and S&P BSE Sensex are at their all-time highs but there is unfinished business for Bank Nifty to test its all-time high.
Multiple triggers may help Bank Nifty to test its new high as ICICI Bank and SBI posted good results while heavyweights HDFC Bank and Kotak Mahindra Bank are doing well because foreign institutional investors (FIIs) are showing some buying interest in the market after heavy selling in July.
Indian economy is also showing a strong bounce-back after the second wave of COVID-19 as we have seen record GST collection and most of the business activities are also at pre-Covid levels.
There are some worries like taper talk and rising COVID cases in the US but the market is not showing any major weakness.
If global cues remain little supportive, Indian markets may outperform and Bank Nifty may take leadership for further gains and FIIs could play a critical role.
Globally, investors are showing interest in economy-facing stocks along with technology stocks as the economy is showing strong growth momentum where financials may do well in India as well.
Technically, Bank Nifty is consolidating above the 36000 mark where 36500 is an immediate hurdle. Above this, we can expect a move towards the 37200/37700 levels.
Technically, most private banks are showing good strength while SBI lost its momentum post Q1 earnings but Rs 420 is a critical support for the stock and if it manages to hold this level, we can expect a strong bounce-back otherwise it may head towards the Rs 400 mark.
The level of Rs 1840-1845 is an immediate resistance zone for Kotak Mahindra Bank, and above this, we can expect a strong rally, while HDFC Bank may face resistance around the Rs 1550 mark.
On the downside, Rs 35200-35000 is a strong demand zone for the Bank Nifty and the strength will continue as long as it trades above 35000 mark while a move below 35000 can cause more wait for Bank Nifty to test its all-time high. 34200-34000 will be the next major support area.
(The author is Head of Research, Swastika Investmart Ltd)
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