Nifty Bank index headed to 44,000 level; Bandhan Bank remains a risky bet

Here's how key constituents of the Nifty Bank index look on the charts.

The Nifty Bank index hit a fresh all-time high of 41,939 on Wednesday. This is the second time in fiscal 2022-23 (FY23) that the index has managed to surpass its previous high. The last time it did so, the index succumed to profit booking and lost 10 per cent in just 11 trading sessions.  

So far this Q3FY23, the Nifty Bank index has gained 8 per cent and has soared 18 per cent in FY23, data shows. This performance, however, dwarfs in comparison to the Nifty PSU Bank index, which has rallied around 50 per cent during this period. In comparison, the frontline benchmark indices, the BSE Sensex and Nifty 50 are yet to hit new record highs and are still nearly nearly 2 per shy from their respective all-time highs. 

Technically, the Nifty Bank Index appears strong. With the support placed at 40,500 and 39,500 levels, the index could see a move to 44,000 levels in the sessions ahead, provided the overall market sentiment stays strong. 

The “Golden Cross” breakout on the daily chart is one of the key reasons why the index looks strong on the charts. There is a negative divergence of the Relative Strength Index (RSI), which is a minor concern, the price action is strong enough and is not letting bears dominate the near-term outlook for this index. CLICK HERE FOR THE CHART

Among the individual banks that comprise the Nifty Bank Index, Bank of Baroda has been the key performers that has doubled in value so far this year. The stock has gained 104 per cent with a large part of the rally in last four months alone. The counter added added 66 per cent in the last four months, data suggests.

Other shares like Federal Bank, IndusInd Bank and State Bank of India have gained 69 per cent, 39 per cent and 30 per cent respectively, since the start of the year. Bandhan Bank is the lone stock that has underperformed with a drawdown of 10 per cent so far in 2022. 

For the most of the Nifty Bank constituents, the overall trend looks promising with stocks gearing up for the next up move.  Here’s the guide to understand their key levels going forward:-

Source: spidersoftwareindia; Support, Resistance levels in Rs