New breakout in Bank Nifty, heading to all-time high

For the first time in the history of Indian stock markets, PSU Bank index surged as much as 28 per cent in intraday trade after government announced Rs 2.11 lakh crore for recapitalization in a bid to revive investments. PSU Bank index rose 28 per cent and Bank Nifty surged 3.6 per cent. However, Bank Nifty, an index with 12 most liquid and large banking stocks, holds only nearly 11 per cent weightage in PSU Banks. Hence, the fall in high weightage private sector HDFC Bank (down 4.8 per cent) pulled back Bank Nifty from gaining further.

After taking a major resistance turned support at 23900-23700 levels, Bank Nifty attempted a slight bounce back in the prior two sessions. In Wednesday’s session, Bank Nifty witnessed a gap-up opening at 24,980 followed by profit booking in the first half an hour and a bounce back yet again.

Bank Nifty has given a downward sloping trendline breakout at 25000-25030 levels. Hence, if Bank Nifty continues to rally northwards, we hold 25160 level followed by 26000 as the immediate resistances. However, if Bank Nifty comes down for gap-filling owing to a provisional news based movement in PSU Banks, we hold 24860-24680 as the immediate supports followed by 24535 and 24000 mark. Bank Nifty may hit levels of 27680-28100 if it manages to hold above 26000 mark on a closing basis.