Here's why Ravi Nathani is optimistic on the financial sector

According to the technical analyst, the Nifty Private Bank, PSU Bank and Financial Services indices may extend the pullback in the near term.

Nifty Pvt. Bank Index

Last close: 21,543.90

In the last 20 trading sessions index is making a triangle shape pattern on charts. The previous lowest closings are 21,122 and 21,455. If we connect these two price points, Nifty Pvt. Bank Index will get a sloping trend line and has just closed above this sloping trend line support.

As this Index saw a sharp recovery from the intraday lows and closed with a positive candle, resulting in a bullish momentum that could be expected the next day.

As the index is trading in a range of 22,000 – 21,500 and currently trading just around the lower band of the range therefore a small technical bounce could be expected in this Index.

Therefore, traders shall hunt for opportunities to accumulate this index or its constituents at lower levels for recovery till the above-mentioned resistance whereas a stop loss shall be placed below 21,290 or 21,190.

No Trade zone for Intraday: 21,615 – 21,475

Expected Intraday Resistance: 21,660 – 21,750 - 21,925

Expected Intraday Support: 21,436 – 21,360 – 21,250  

Nifty PSU Banks Index

Last close: 4,236.20

The index seems range bound on charts between 4,420 – 4,150. On Wednesday, the Nifty PSU Bank Index made a low of 4,154 just near the lower range, and then a sharp bounce was been witnessed from the lows, resulting index closing in green by 30 points.

With a strict stop loss of 4,150 risky traders could buy this Index or its constituents in the near term for a technical bounce till 4,420. Before reaching this target, the index may face resistance at the level of 4,320 and 4,360.

On monthly charts Nifty PSU Bank Index closed above the Bollinger Band, indicating some pullback before it resumes the uptrend, therefore hunting for opportunities to sell or book profits at higher levels would be the best trading advice for traders and Investors intending to trade in near and short term.

No Trade zone for Intraday: 4,215 – 4,260

Expected Intraday Resistance: 4,275 – 4,320 - 4,360

Expected Intraday Support: 4,200 – 4,175 – 4,148  

Nifty Financial Services Index

Last close: 18,566.60

Sharp Sell off since the last six trading sessions was been witnessed with 910 points correction on charts, indicating the Index is trading close to its support level, Bollinger Band also indicated some pullback because the index had traded below the lower bands and managed to close just above the lower Bollinger Band.

Traders and Investors shall buy this index or its constituents on dips as resulting a technical bounce could be expected in the near term.

No Trade zone for Intraday: 18,500 – 18,625

Expected Intraday Resistance: 18,668 – 18,750 - 18,910

Expected Intraday Support: 18,464 – 18,405 – 18,325  

(Ravi Nathani is an independent technical analyst. Views expressed are personal).