Why is Nifty Bank the hot topic in recent times?

Next week will be a decisive week as the monthly contracts will expire and high volatility is expected.

This week, Nifty Bank registered a fall of about 757 points or 1.95 per cent to close at 37,976.25. Nifty Bank is in correction mode since October 25, when it had achieved its all-time high level of 41,800. Since then, it has corrected about 3,800 points. Nifty Bank is below its 50-DMA for the first time since August 2021. The RSI lies at 38, indicating weakness. We also find that Nifty Bank is weaker than Nifty at present. The technical parameters clearly indicate the bearishness of Nifty Bank. 

Analysing options data, the 41,000 call option has the highest open interest and huge straddle positions are created at 38,000. This indicates that the market expects Bank Nifty to hover around 38,000 for the next week. The PCR stands at 0.62, indicating pressure on the higher side.  

FIIs hold major stake in the banks. So, naturally, if they are on the selling mood, banks are going to get affected first. It is evident from the fact that most of the banks are nearing their 200-DMA and are down by almost 10-12 per cent from their all-time highs. Next week will be a decisive week as the monthly contracts will expire and high volatility is expected. The next support stands at 37,500 and then 37,000, which is its 100-DMA. Also, on the weekly timeframe, 20-DMA lies at 37,000, and thus, 37,000 becomes a crucial support. The only turnaround for Nifty Bank would be when the FIIs turn net buyers. We can expect good short covering if that happens but it’s too much to ask for from the upcoming week. We suggest you to watch out for the crucial levels as Nifty Bank shows no signs of reversal.