Nifty Bank Loses Momentum, Drags Nifty 50!
has been a laggard for the last many sessions. The index hit a high of 41,979.1 on 16 February 2023 and it seemed like it was about to give a breakout, especially when the broader market index had already done so a day ago after it soared above 18,000.
While the trend in Nifty 50 became bullish, the lackluster performance of Nifty Bank took a toll on the former and both of them are now struggling to scale to higher levels. The banking index is looking quite weak with both PSU and private sector lenders facing some liquidation from investors’ portfolios. In fact, the index closed today’s session at the lowest level of the year, at 3,701.2 after a steep intraday cut of 1.79%.
Nifty Bank is controlled majorly by two private banks- HDFC Bank Ltd (NS:) and ICICI Bank (NS:), both of which have a weightage of around 33% and 26.7%, respectively. These large-cap banks are also among the top 3 highest heavyweights in Nifty 50, holding a 9.47% and 7.66% weight respectively. As long as these banks are not gaining momentum on the upside, neither the Nifty Bank nor the Nifty 50 would see decent upside potential.
Looking strictly from the technical point of view, the trend in Nifty 50 is still positive but due to some drag from banks, its strength has somewhat been compromised and it’s trading sideways. Still, a dip would prove to be a buying opportunity, but to say the same for Nifty Bank is difficult.
As for the current weekly export, the Nifty 50 might not expire above 18,000 as there is a very high open interest (OI) of around 2.79 lakh contracts on the 18,000 CE, which is not so common. In fact, the ITM strike of 17,900 CE also holds an OI of over 2 lakh contracts. The upside seems limited for the next two days.
Coming to Nifty Bank, 41,500 CE has the highest OI of 1.92 lakh contracts, meaning traders could see some bounceback probably due to 4 straight sessions of fall. On the charts, the level of 41,200 seems to be a good resistance for the next two days.
Read More: 2 ‘High-Quality’ Stocks to Look for During Market Fall!