Bank Nifty outlook: Banking indices surged on Thursday with Bank Nifty rising 0.52% to 41,214.05, Nifty Financial Services climbing 0.42% to 18,449.10, Nifty PSU Bank skyrocketing 1.30% to 3,774.05 and Nifty Private Bank advancing 0.24% to 20,879.35 after the Reserve Bank of India surprised markets by pausing a rate hike earlier than expected. The NSE Nifty 50 surpassed the crucial 17600 level and Sensex surged 181 points. Analysts believe that RBI’s decision may provide short-term relief to the banking sector and has given investors further cause to rejoice.
Where are banking stocks headed now? Check Bank Nifty support, resistance
Banking sector may witness short-term relief rally
“Banking sector will witness some short-term relief rally as the global banking crisis fears wane. Now on a macro level, we could see FPI’s unwinding short-sell position over the coming months. Subsequently, we should also start seeing FPI money flowing back to Indian markets as the US fed rates peak and rate cuts get priced into the markets. A pause in interest rates will be a positive for the banking sector at this juncture – even though it results in the peaking of net interest margin (NIM), the credit offtake and improvements in the credit quality of its corporate borrowers will offset the effect of peaking NIM. Besides the domestic factors, banking stocks will be driven by global influences for now,” said Divam Sharma, Founder, Green Portfolio PMS.
Market tone changed to positive; profit-taking or consolidation cannot be ruled out
“The market is in a good mood, and this policy provides us with further cause to rejoice. However, given that we have witnessed a good recovery from recent lows and that we have a long weekend and a weekly expiry, some profit-taking or consolidation cannot be ruled out. The market’s overall tone has changed to positive in the near term. If you have cash then sell, and buy in the future,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Bank Nifty resistance at 41250, immediate support seen at 40650
“The crucial resistance levels for Nifty and Bank Nifty are 17600 and 41250, respectively. If they are successful in crossing over these levels, we can anticipate a move in the direction of the 17770 and 41650 levels; otherwise, some profit-taking is anticipated. On the downside side, immediate support levels are at 17440 and 40650. The texture is the buy-on dip,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.