Have housing finance companies' stocks hurt the rising trend of Nifty Bank?

Although there is no direct correlation between housing finance companies' (HFCs) stocks and Nifty Bank constituents, still the liquidity crisis around Dewan Housing Finance Corporation (DHFL) and Indiabulls Housing Finance have affected the sentiment severely. Various banks have exposures in these HFCs impacting the rising trend of Nifty Bank.

Earlier, the Nifty Bank looked set to cross the range of 31,700 – 31,800 with the strong support of 31,200 on closing basis. It made almost four attempts to climb towards 31,800 with every dip witnessing buying momentum.

With several doubts looming over the functioning of these HFCs, the Nifty Bank breached the strong support of 31,200, a scenario wherein one can see a consolidation breakdown impacting the rising trend. Now, Nifty bank needs to scale above the same, otherwise it may slowly slip toward 30,200 levels, which is its next significant support level. A mild support stands at 30,600 levels as well.

One can say this is a minor impact on the Nifty Bank trend but one should not forget that if the index is unable to absorb the selling pressure now, then it may lead to heavy sell-off going ahead. CLICK HERE FOR DETAILED CHART VIEW
 

Nifty Bank includes Axis Bank, Bank of Baroda (BoB), Canara Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC Bank, IndusInd Bank, Punjab National Bank (PNB), State Bank of India (SBI), and Yes Bank.    

          

Out of this list, five banks such as Axis Bank, Federal Bank, HDFC Bank, ICICI Bank and SBI are trading at the upper band, which may see profit-booking if key levels are broken. Lenders like Bank of Baroda and Canara Bank are trading in a range-bound level, which seems fair considering the uncertain trend. However, IDFC Bank, IndusInd Bank, PNB and YES Bank may see more downside.