The Nifty Bank surged over 1,100 points on Tuesday or over 2%, the biggest single-day advance for the index since May 25. Barring HDFC Bank, most of the constituents fared well, with the PSU Banks outperforming their private counterparts. In fact, the PSU Bank index was the top sectoral gainer on Tuesday.
With Tuesday’s move, the Nifty Bank has also closed above the mark of 55,000, and also at levels last seen on May 25. The index has gained in five out of the last six trading sessions and has been a key factor in ensuring that the Nifty has managed to hold on to support levels lower down.
What Are The Key Levels For Bank Nifty?
Despite outperforming for the better part of last week, the Nifty Bank found itself stuck in a 1,500-point range of 53,000 on the downside and 54,500 on the upside.
With Tuesday’s move, the index managed to breakout from that range and close above the mark of 55,000.
The first level to watch on the upside now is the May 25 closing level of 55,293 or close to the 55,300 zone, above which, the index could also retest the recent swing high of 55,405, which was the intraday high on May 25.
On the downside, 54,500 will now become an important support for the banking index, which has continued to give 1,000-point intraday moves frequently in the recent past.
Is The Bank Nifty A Buy Or Sell?
Vatsal Bhuva of LKP Securities has observed the Nifty Bank breaking out from a contracting wedge pattern on the hourly chart and having reclaimed and sustained above the 20 and 50-Day Simple Moving Averages on the daily charts, indicating an improvement in price structure.
“The breakout, coupled with improving momentum indicators, suggests a positive bias from current levels. Support is placed at 54,500, followed by 54,300, while resistance is seen at 55,500, which coincides with the recent swing high. A decisive move above 55,500 could extend the rally towards the 56,200 zone,” he said.
The Nifty Bank’s technical setup is favourable, according to Sudeep Shah of SBI Securities, who expects the index to continue its upward trajectory in the near-term. He sees an upside target of 55,700, followed by 56,200 for the Nifty Bank. On the downside, he expects the 54,600 – 54,500 zone to provide support against any short-term pullbacks.
A sustained move above the resistance band of 55,600 – 55,700 will result in the Nifty Bank heading back to levels of 56,000, noted Om Mehra of SAMCO Securities. He expects the 54,800 – 54,700 zone to act as a key support and as long as the index remains above these levels, the outlook remains bullish.
