Nifty Bank had an intra-week high of 40,690. The index was down 2.19 per cent for the week. On the weekly chart, the Nifty Bank formed a bearish candle and didn't close above 20 and 50 day MAs.
The Bollinger band indicates that the index has closed on the edge of the lower band, suggesting weakness in the broader index. A sub 45 level RSI value indicates a lack of strength. On the daily chart, indicators such as ADX and ATR remained on the weaker side. Private banking stocks are likely to have short term buying opportunities.
IndusInd Bank lost 10.86 per cent last week, while no banking stocks settled higher. The February bank futures traded with a premium of 236 points, while the PCR remained at 0.83 level.
Nifty Bank Put options distribution suggests that the 39,000 strike and 38,000 have the highest open interest OI concentration, which may act as support for the current expiry. The Nifty Bank Call strike of 41,000 witnessed significant OI concentrations and may act as a resistance for the month's end.
The index is trading forming a lower high for a couple of months. Benchmark Indices would catch upside directional movement when the index was above 41,500.
The Nifty PSU Bank index ended at 3,681. It would be on a weaker side if it closes below 3,500 level. It would be suggested that traders should not be going 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 fallout from the Silicon Valley Bank, Signature Bank, and Credit Suisse has caused raders to be concerned about the strength of the US and European financial sector.