Bank Nifty trading with positive bias after hitting new high; buy at these levels, watch volatility

Bank Nifty is trading with a continued positive bias after hitting a new all-time high on December 8 after the RBI kept the repo rate unchanged at 6.5 percent for the fifth time in a row. However, the index may see some volatility in the near term. Investors can buy into the banking index on dips for short-term gains, said technical analysts.

On a weekly front, the Bank Nifty is now up 5 percent this week, on its way to clock the biggest weekly gain since July 2022. At 10:40 am on December 8, Bank Nifty traded at 47,106, up 265 points or 0.6 percent.

“Bank Nifty has given a massive breakout. We expect the banking index to trade with positive bias. Both PSU and private banks are looking strong, and may continue the ongoing bullish move with stock specific actions,” said Arun Kumar Mantri, Founder of Mantri Finmart.

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“Profit booking around 46,800 presents a favourable opportunity for short-term traders to enter, setting a stop loss below 46,500 for targets ranging between 47,350 and 47,550,” Mantri added.

However, traders need to watch for short term volatility. “In the short term, Bank Nifty may encounter volatility; a breakout above 47,200 could propel the index towards 48,000. On the downside, support is positioned at 46,800, and a breach below this level might lead to a short-term consolidation in the index,” said Rupak De, Senior Technical Analyst at LKP Securities.

“The RBI Governor’s decision to maintain key lending rates, already anticipated by the market, coupled with an upward revision of the real GDP growth projection, is expected to serve as a positive factor for banks,” said De, adding that the latest rally in the banking index was mainly driven by the strength in HDFC Bank.

For further significant upside, HDFC Bank and ICICI Bank stocks will need to provide support. “The RBI policy, aligning with market expectations by maintaining the rate status quo, has positively impacted rate-sensitive stocks, pushing Bank Nifty to new highs. For any significant upward movement, HDFC Bank and ICICI Bank will need to gain further bullish momentum,” said Aamar Deo Singh, Head Advisory at Angel One Ltd.

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According to Singh, key levels to monitor for Bank Nifty are 46,300-46,400 as the support zone and 47,300-47,400 as the resistance zone.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

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