The Indian stock market opened the week on a strong note, extending its winning streak for the sixth consecutive session. Among the top-performing indices, Nifty Bank has been stealing the spotlight, marking its eighth straight day in the green. As of now, the index is trading at 51,684.40, up by 1,100 points or 2.16%.
Why is Nifty Bank surging?
The rally in Nifty Bank can be attributed to several factors, such as technical indicators, market sentiment, and institutional activity. Let’s break it down
1. According to Axis Securities weekly derivatives report, the Bank Nifty futures for the current expiry closed at 50,593.55, reflecting a 5.1% price gain (2,433.6 points) and a 17.4% decline in open interest. This suggests that traders who were holding short positions had to cover their bets, adding fuel to the rally.
The Long-Short Ratio for Foreign Institutional Investors (FIIs) in index futures jumped from 0.23 to 0.47, indicating a shift towards more bullish bets. This means FIIs are now adding more long positions and reducing their short exposure.
The Bank Nifty is expected to trade between 49,500 and 52,000 this week, with 50,000 as a key level. Maximum put open interest is at the 49,000 strike, followed by 49,500 and 50,000. The highest call open interest is at the 52,000 strike, followed by 51,500 and 51,000,” added the Axis Securities weekly report.
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2. Positive commentary from brokerage firms has further strengthened sentiment. Citi, for instance, has reiterated a buy rating on ICICI Bank, adding to the bullish momentum.
3. The current rally comes after a significant market correction. The Sensex, which had almost touched 86,000 in September 2023, tumbled to below 73,000 earlier this year. However, it has since rebounded sharply, now standing above 77,800.
According to Shrikant Chouhan, Head of Equity Research at Kotak Securities, “The Bank Nifty rallied over 5% last week and is currently holding strong above the 50,000 mark. Traders should keep an eye on 50,000 and 49,700 as key support zones, while 51,000 and 51,300 will act as resistance for positional trades.”
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