Banking stocks have outperformed the broader markets this year. Read on to know whether it can cross the 45,000 mark:
Bank Nifty touched a record high of 44,151.80 on December 14, rising above the 44,000 level to reach a record high. Year-to-date, the Bank Nifty index is up nearly 25%, compared to a 7% rise in the Nifty 50 index. Today also, when the benchmark indices opened in the red, the banking index held the 44,000 mark.
On the global front, the US Fed raised rates by 50 basis points on Wednesday, as widely expected, and its statement maintained reference to "ongoing increases" in the fed funds rate as appropriate, which Economists believe many more rate hikes are due. potential.
In recent months, smaller banks have experienced an especially strong rally. However, some analysts expect a rally in largecaps as the momentum in smaller banks stocks will slow down in the next few days. Axis Bank, HDFC Bank, IndusInd Bank and SBI are improving their bias and helping the index to set new records as Bank Nifty moves up slowly and steadily.
Banking stocks have significantly outperformed the broader markets this year on hopes of a pick-up in economic activity and easing of the monetary policy stance by the RBI to provide financial gains.
What to expect for Bank Nifty going forward?
Experts say they expect banking indices and stocks to head into positive territory in 2023 with an overall bias and sentiment.
“Bank Nifty is well set to extend the momentum further with expected upside targets of 45,500-46,000 levels. The daily range for Bank Nifty will be 43,700-44,600 levels," said Vaishali Parekh, Vice President, Technical Research, Prabhudas Lilladher.
According to Parekh, the Bank Nifty Spot Index has support at 43,700-43,650 and resistance at 44,600/44,650.
"Technically, no signs of reversal are seen for Bank Nifty as of now as the index is making higher highs and higher lows on the daily chart, and has reversed from 10-day EMA support on last 14 occasions since October 17, 2022 Has gone," said Jayesh Bhanushali, AVP, Research, IIFL Securities.
The index continues to remain above the 20-day MA along with the upper band of the Bollinger Bands along with the 2SD of this MA. Bhanushali added that since moving up in October, the index has faced minor resistance around this upper band, and we are currently right at this level.
“With the RSI being at higher levels on the daily and weekly time frame, a short term downside correction cannot be ruled out. But this is likely to be a buying opportunity as the trend is likely to remain positive until 42,900 is breached.
What do F&O figures say?
“Bank Nifty - the options chain on a weekly basis shows the most aggressive straddle 44,000 - each with over 30 lakh shares Open Interest (OI), adding up to 45,000CE as well as a strong addition of over 34 lakh shares OI. The data thus formed indicates that the upward momentum will continue for some time and the index will continue to see fresh highs," said Shilpa Rout, Derivatives Lead Analyst, Prabhudas Lilladher.
December ending data shows that the 43,000 put has a maximum OI indicating that the put writers believe that this level, which is just above the previous swing low, is unlikely to be broken. On the other hand, 45,000 call has maximum OI which indicates ceiling level for the index, feels IIFL Securities analyst.
The PCR for the December series is 1.08 times, indicating high put writing. If we look at the weightage of individual stocks on the index, HDFC Bank has 26.3% and SBI has 11%. HDFC Bank and SBI both have given bullish flag pattern breakout, thus they can drive the index higher."
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