Canara Bank, SBI shares may stage recovery; ICICI Bank stock to do well: Sumeet Bagadia

Sumeet Bagadia, Executive Director at Choice Broking, believes that PSU bank stocks such as Canara Bank and State Bank of India (SBI) may stage a recovery, while private lender ICICI Bank may do well, in case Nifty Bank shows positive momentum this week.

He noted that Nifty Bank on the weekly chart sent sideways to bearish signals, as the index struggled to sustain higher levels, indicating a potential trend reversal.

It formed a small-bodied bullish candle this past week with a higher wick, highlighting indecision in the market and selling pressure at elevated levels. This pattern underscores weakening bullish sentiment, suggesting a strong likelihood of continued bearish pressure in the upcoming sessions, Bagadia said.

"A 'sell on rise' strategy is recommended as long as the index remains below 52,000, with downside targets at 50,700 and 50,200," he said.

For the week, Nifty Bank closed at 51,311.30, up 1.09 per cent. On the weekly timeframe, Nifty Bank has closed below its short-term (20-day) Exponential Moving Average (EMA), which could lead to further downside testing at the medium-term (50-day) EMA, the expert said.

"The Relative Strength Index (RSI) stands at 50.33, reflecting a recent decline and signaling weakening momentum. The index may encounter significant resistance in the 51,500–51,800 range. If Bank Nifty rises, ICICI Bank from the private banking sector is likely to perform well, while Canara and SBI from the public sector may show potential for a reversal from lower levels," Bagadia said.

For the ongoing expiry, Put options showed the highest concentration near the 51,000 and 50,500 strikes, indicating potential support levels.

Conversely, Call strikes at 51,500 and 52,000 have significant open interest, marking potential resistance and suggesting a trading range of 50,500–52,000 for the week.

Bagadia advised traders to exercise caution, maintain strict stop-loss levels, and avoid overnight long positions to manage risks amid market volatility.