Directionless Nifty Bank has support at 42,780 level, says Sumeet Bagadia

Global market remained under pressure, which led to weakness in banking and financial sector this past week. There was nearly 700 points swing on the Nifty Bank index last week, with shuffling seen in banking names.
The Nifty Bank index settled last week at 43,622.90, down 0.72 per cent from the previous week while the Nifty Finance index fell 0.4 per cent.

Two stocks advanced while 10 declined among Nifty Bank constituents. One of the weekly top gainers for the Nifty Bank was IndusInd Bank, which gained 2.83 per cent for the week while State Bank of India lost 1.48 per cent. The Index is trading below its 20-DMA, forcing the bulls to remain on the sidelines.  Indicators as RSI and MACD indicate sloping downside on the daily time frame.

Nifty Bank June futures traded at a premium of 57 points.

Nifty Bank Put options open interest (OI) distribution shows that the strike of 43,000, followed by 43,500 had the highest OI concentration, which may act as support for current expiry. The Nifty Bank Call strike of 44,500, followed by 44,000 witnessed significant OI concentrations and may act as resistance for current expiry.  

Among private banks, ICICI Bank remained on the weaker side while IndusInd Bank is witnessing buying interest among traders. Overall, the Nifty Bank looks choppy and non-directional for the time being until 42,780 or 44,500 level is taken out. However, some blue-chip banking stocks looks appealing currently for the long term growth prospects.  It seems that we are at the end of the monetary tightening cycle. With inflation cooling off, the RBI is unlikely to raise rates any further unless there are some unexpected shocks to inflation. 

(The author of this article is Executive Director at Choice Broking)

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