Trending sector: PSU Banks

Nifty PSU BANK has gained over 3% in Friday’s trading session and has been the top performer among the sectoral indices.

The PSU Bank sector is bullish today and has outperformed the other sectors. Nifty PSU BANK has gained over 3% in Friday’s trading session and has been the top performer among the sectoral indices. Canara Bank, Bank of India, and Bank of Maharashtra have emerged as the top gainers in this sector, and have soared higher by about 4.5%, 3.8% and 3.5%, respectively.

Among the pack, other stocks are higher by over 2%. On the technical chart, the index has formed a strong bullish candle and currently trades at the day’s high. It has taken out its short term resistance of 2750 decisively and continues to trade higher. Comprised of 12 stocks, the index trades above all the key short term and long term moving averages. Since the low of 2667.95, the stock has gained over 5% in just four trading sessions.

Along with its strong price structure, the 14-period daily RSI is placed just below 60 and above the prior swing high, indicating strong strength. The MACD line has moved above the zero line and is already above the signal line and indicates strong momentum of the index. Moreover, the Elder Impulse system has signalled a likely bullish momentum ahead. As per the Guppy’s Multiple Moving Average (GMMA), the index is extremely bullish.

In recent times, the sectoral index has outperformed the broader Nifty 500 index. On a YTD basis, the former has gained over 11% against flat returns of the latter. Considering the strong price structure, bullish technical parameters and recent performance, the road ahead for the index looks pretty smooth.

It can test the levels of 2900, followed by 3000 in the short to medium term. With PSU banking stocks being technically bullish and the government's divestment plans, the index has a strong edge over the sectoral players. Moreover, with FIIs turning out to be net buyers in past two days, the banking stocks are likely to perform better, thus can propel the index higher.

Also read: Top 5 Large-cap gainers and losers this week!