Chart Check: How to trade banking stocks ahead of RBI policy

NIFTY BANK: The Nifty Bank is witnessing higher volatility ahead of Monetary Policy announcement by the Reserve Bank of India (RBI) later today. The current level on technical chart indicates upper band resistance around 26,860 – 26,920 levels. The index has gained strength over the past few sessions. The 100-day exponential average (DEA) is hovering around 26,050 levels, which the index has been honouring since the last four – six sessions. The outlook for Nifty Bank index remains stable, though the impact of monetary policy could adversely affect the rising trend for the December series, as the technical chart suggests.

Nifty Bank index

Among stocks, HDFC Bank and Kotak Bank have become favourites. HDFC Bank has risen around 7 per cent, while Kotak Bank has gained nearly 8 per cent in the last one month.  In comparison, the Nifty50 moved up 3 per cent, while the Nifty Bank gained 3.50 per cent during this period.

KOTAK BANK: Technically, Kotak has a formed a symmetrical triangle in daily charts with breakout above Rs 1180. A strong close in the last week coupled with a rise in volumes indicates long participation of traders. It may get strong buying support in the range Rs 1195 – 1180, which also is its 200-days exponential moving average.

HDFC BANK: The stock has formed a triangle/ double-bottom breakout above Rs 2,020 as per the daily chart pattern with a steep rise towards Rs 2,100 in just five trading sessions. The 100-day exponential moving average (EMA) indicates a strong support at Rs 2,020 levels, with another support falling at Rs 2,005 (200 EMA as per daily chart pattern).

FEDERAL BANK: In the mid - cap segment, Federal Bank is showing rising strength with relative strength indicator (RSI) holding 60 level firmly. The MACD is consistently trending above zero line, while the stock is witnessing pressure in the range Rs 87.50 - 86.50.

The 200-day exponential moving average (EMA) falls at Rs 85.5, which has become a resistance zone for the stock. The 50-day EMA is between Rs 79 – 80 and provides support.


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