Trending Sector: Nifty Bank

NIFTYBANK is one of the top-performing sectors along with Nifty FMCG and Nifty Auto today. IndusInd Bank, HDFC Bank, and Kotak Bank are currently the best stocks in this sector.

The banking index has surged about 1.10% in the first half of Tuesday’s trading session. On the technical chart, the index has formed a strong bullish candle with an open=low scenario. It has hit the day’s high at 34710.25 and trades near to it. It was undergoing a correction period lately and has corrected about 12% since its prior swing high of 38765.85. The index has then fallen sharply towards the level of 34000 but has seen strong support at this level. It bounced back from this level and is up nearly 3% in the last two trading sessions.

The technical parameters are indicating an improvement in strength. The 14-period daily RSI has jumped above 36 and points northwards. The MACD line and the signal line is converging and is likely to give a bullish crossover signal in the upcoming days. Analyzing the options data for the second weekly expiry, we find that huge put writing has been done at the strikes ranging from 34000 to 34500. Moreover, call addition has been done at strikes ranging from 34500 to 34700. The maximum open interest on the put side stands at 34000 and 36000 in case of the call side. The PCR has improved to 0.91 which stood earlier at 0.80.

Overall, the outlook of the index is still bearish. It trades below all the key short term and long term moving averages. A sharp sell-off recently added too many shorts to the system. Thus, we can very well witness a short-covering rally up to the levels of 35000, followed by 35200. Moreover, an uptrend can be confirmed if the index crosses above the mentioned levels and 36000 can be tested. On the technical chart, the index shows early signs of reversal as per the price structure, and the bulls can see a hope of revival!