Nifty Bank's weekly chart shows it's weak; short-term buying

Nifty Bank made an intra-week high of 40,201. 35, down 0.51 per cent. The weekly chart shows the bearish candle of the Nifty Bank. It didn't close above the 20 and 50 DMAs.

The Bollinger band indicates that the index is close to the edge of the lower band, which indicates further weakness. The RSI settled below the 45 mark, which indicates a lack of strength. On the daily chart, indicators such as ADX and ATR remained on the weaker side. Short-term buying opportunities are likely to be in private banking stocks, according to the daily chart.

ICICI Bank gained 1.93 per cent last week, while AU BANK lost 5.14 per cent. The put call ratio PCR closed at 0.73 level, while the February futures of the Nifty Bank traded at a 12 point discount.

Nifty Bank Put options distribution shows that the 39,000 strike price, followed by 38,000, have the highest open interest OI concentration, which may act as support for the current expiry. Nifty Bank Call's 40,000 strike followed by 40,500 witnessed significant OI concentrations and may act as resistance for the March expiry.

The banking index is forming a lower low-high on a longer time frame chart. The banking index will catch upside directional movement once it's above the 40,500 level. The PSU Bank index ended at 3,565 last week. It may be weak if the index falls below the 3,500 level. Traders should not go with aggressive long positions.

Long-term investors can accumulate high-quality banking stock at these levels, while short-term traders should trade in smaller quantities to protect their capital. The concerns about how stable the US banking sector is are still being talked about, which is why the volatility continues. The recent fall has faded hopes of a sustained recovery and we might see range bound moves in the index.