Nifty Bank hits 200-DMA. How to trade bank stocks in the next few sessions

Expect PNB, Bandhan Bank and other banks to trade with a negative bias below 200-DMA

The Nifty Bank has corrected over 10 per cent so far this month and this furious downside has created a fear, which distorts the confidence of traders and investors.

On Monday November 29, the Nifty Bank breached its 200-day moving average (DMA) placed at 35,700 hitting an intra-day low of 35,327. Market participants regard this average as the crucial denominator and firmly believe in its significance. Any stock trading below the 200-DMA is viewed as a negative stock with inclination of further downside. 

So, as long as the Nifty Bank defends the support of 200-DMA, the positive bias may regain the upward momentum and see a rally in the direction of 38,000 level, which is the next crucial hurdle. CLICK HERE FOR THE CHART

Out of the 12 Nifty Bank stocks, 8 stocks have breached the 200-DMA with aggressive volumes. These include AU Small Finance Bank Ltd, Axis Bank Ltd, Bandhan Bank Ltd, HDFC Bank Ltd, IDFC First Bank Ltd, IndusInd Bank Ltd, Punjab National Bank and RBL Bank Ltd.

Among these 8 banks the Bandhan Bank Ltd and Punjab National Bank are nearing their next crucial support levels. These supports may be the areas wherein the stocks had witnessed major accumulation in the past.

Bandhan Bank Ltd (BANDHANBNK)

Likely target: Rs 300

Upside potential: 8%

Since the May 2021, the shares of Bandhan Bank have seen accumulation in the range of Rs 275 to Rs 260 levels, which led to a decent recovery earlier. The current levels are close to the same range and may witness buying momentum, according to the daily chart. This outlook may see a reversal towards Rs 300 level.  CLICK HERE FOR THE CHART

 

Punjab National Bank (PNB)

Likely target: Rs 41

Upside potential: 9%

The overall trend for the Punjab National Bank have been in the sideways to consolidation phase on year-to-date basis. On the higher side, the Rs 46 –Rs 48 witnessed hurdle and on the flip side, the Rs 35 to Rs 32 have seen a buying support. The current weakness shows an attempt to test this downside support and may see revival towards Rs 41 level. CLICK HERE FOR THE CHART