Nifty Bank: New All-Time High Coming Next Week!

  • Stock Market Analysis
Aayush Khanna/Investing.com - Investing.com

The banking benchmark Nifty Bank index has been facing some resistance for the last few sessions, just like Nifty 50 . Some of the credit could be given to the nearly overbought status of the index, all thanks to a stupendous rally from the lows of 38,600 - 38,700.

But the strength of Nifty 50 which closed at the highest level of 2023 on Friday might support Nifty Bank toward a lifetime high this week. The consolidation phase that started in mid-May 2023 has a resistance of around 41,140 and a support of around 43,450 - 43,400. Since the last two weeks, the index has been moving sideways within this narrow range, representing a volatility contraction.

Image Description: Daily chart of Nifty Bank (spot)

Image Source: Investing.com

This simply means, if the resistance gets breached this time, the move could be sharp as volatility expansion will take place. Also, a cross above an all-time high will also lead bears to run for cover and the last group of remaining short sellers will be forced to close out their positions, further leading to some buying action. In a nutshell, even if some traders are short on Nifty Bank by this week’s closing, holding on to these positions after 41,151.8 (spot) might be a bad idea as there are no overhead supply zones to stop the rally.

Looking at an 84.5-point higher closing of SGX Nifty, the Indian markets will likely open with a gap up and that small push would probably be enough for Nifty Bank to break the resistance and scale to a lifetime high.

Looking at options data, 44,000 CE for the 1 June 2023 weekly expiry holds the highest open interest (OI) of 1.51 lakh contracts. In case a gap-up happens on Monday, these positions will have to be covered as these contracts are already ATM. In a similar fashion, 44,000 PE also holds the highest OI of 1.31 lakh contracts, showing the confidence of bulls.

Although HDFC Bank (NS: HDBK ) is not participating in this rally and closed last week with a 1.89% cut, another heavyweight - ICICI Bank (NS: ICBK ) is looking quite strong and has already marked a new all-time high on 23 May 2023. A single good day from HDFC Bank will be sufficient for Nifty Bank’s new high in the next week.

Read More: Explained: How a Finfluencer Ended Up Paying 6.5 Cr to SEBI!

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  • Dharamvir Waliya @Dharamvir Waliya
    0545630643
    Like 1
  • Vivek Bhatia @Vivek Bhatia
    Great Analysis, Could you please cover RHL stock as well?
    Like 1
    • Aayush Khanna @Aayush Khanna
      Thank, Vivek. RHL seems a newly listed co., don't have much data to analyze.
      Like 0

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  • Anirudh Kappagantu @Anirudh Kappagantu
    what are the support and resistance right now?
    Like 0
  • veerakumar veerachamy @veerakumar veerachamy
    USA debt ceiling issue gonna burst 1 June. Volatile may be night side at the same time like Khanna when All time high breakout needs to sustain for strong upside move else market correo will happen.
    Like 2
  • ankit maheshwari @ankit maheshwari
    tomorrow going with PE ......
    Like 0
  • Grazus AAdi @Grazus AAdi
    its a trap heavy selling soon
    Like 0
  • Grazus AAdi @Grazus AAdi
    sab bulls ke sapne choor ho jayenge
    Like 1
  • radha krishnan @radha krishnan
    Need further insights on Nifty and Bank corelation for trading probabilities and strategies
    Like 0
    • Aayush Khanna @Aayush Khanna
      If you are talking about pair trading, explore Nifty Bank and Fin Nifty.
      Like 1

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  • Shreyas shridhar Sonkawade @Shreyas shridhar Sonkawade
    I think this expiry bn would close above 46000
    Like 0
    • Jsp Trader @Jsp Trader
      Noway. Bro 44800 max if nifty supports
      Like 0

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  • radha krishnan @radha krishnan
    Good Analysis, Co relation between Nifty and Bank nifty need to be analysed indepth Which can give further trends in the short term as well as long term , making it easier for traders to predict
    Like 0
  • mohsin Pirani @mohsin Pirani
    What will the status of June 44000 PE be? Should we hold? Please advise
    Like 0
    • Aayush Khanna @Aayush Khanna
      I can't advice you as I am not a SEBI-registered IA.
      Like 0

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  • Sathishkumar Ashokan @Sathishkumar Ashokan
    very good insights
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  • SUNIL PUROHIT @SUNIL PUROHIT
    I eagerly wait for your article. You cover good points n insight is also impressive.
    Like 2
    • Aayush Khanna @Aayush Khanna
      I am glad you are liking them, Sunil :)
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  • Stock Adda @Stock Adda
    Nifty can be on 12 june 19200
    Like 0
    • VISHAL SHAH @VISHAL SHAH
      Yes, definnately
      Like 0

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