Since 2014, there have been only five such instances where Bank Nifty gained and outperformed Nifty for four consistent weeks.
Agencies“This is an extremely bullish occurrence for Bank Nifty, and traders must take note of it since Bank Nifty tends to rally after such instances,” said Sanjay Moorjani, analyst, SAMCO Securities. On the heels of this trend, the average 1-month, 2-month, and 3-month returns for Bank Nifty have been 0.74%, 6.54%, and 7.98%, respectively, he said.
The Bank Nifty index has gained nearly 8% to 48,161 zone in the last four weeks and is just 1.5% away from its lifetime high of 48,636. The index futures witnessed a fresh build-up of bullish bets with open interest jumping 81% to 46.62 lakh units. Implied volatility – traders’ perception of near-term risks to a stock or an index – of Bank Nifty options declined from 19.71 to 15.76.
Analysts said traders were writing Bank Nifty puts at lower strikes, which indicates they expect limited downside from the current levels. “Bank Nifty has surpassed its descending supply trend line and is maintaining a strong position above the 20-day exponential moving average (DEMA) on daily scale,” said Chandan Taparia, analyst-derivatives, Motilal Oswal Financial Services. “Until Bank Nifty holds above 47,000 zones, we are expecting it to head towards a lifetime high of 48,636 and a fresh rally towards the 49,500 zones. On the downside, key support exists at 46,500 and 46,000 zones.”
Private sector lenders such as ICICI, Axis, Kotak and HDFC gained 3-4% in the past week.