Nifty Bank index likely remain sideways in coming weeks, says analysts

Nifty Bank has been an outperformer for the last two months, and the bias still remains positive for the sector.

However, the Nifty Bank Index will trend sideways to positive in the coming weeks, with some possible consolidation, analysts said. The immediate support for the banking index is 42,900 level, and 43,500-44,300 level is the resistance. Whereas, 42,200 level is strong support.

Analysts predicted that despite potential index consolidation in the upcoming weeks, stock-specific movements would be visible. They recommend buying Federal Bank Ltd, Kotak Mahindra Bank Ltd, and IndusInd Bank Ltd.

"The indicators are overbought, hence we may see some consolidation in the bank index. The overall trend remains positive, and any dips would be buying opportunity. Kotak Mahindra Bank, and IndusInd Bank are the top picks," said Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One.

Further, Ruchit Jain, lead research at 5paisa.com believes that the support of 20-day exponential moving averages (DEMA) is at 42,500 level, and the broader trend remains positive till index trading above it.

Basically, 20 DEMA is the average of last 20 days, and if the prices are above the average its a positive sign, and if the prices are below the average then its a negative sign.

Over the period of three months Nifty bank index has risen 9.5%, and as of Monday its nearing its 52-week high. The Nifty bank has gained 34.27% from 52-week low of 32,155.4 made on March 8.

On Monday's early trade, the positive contributors in the Nifty Bank index were IDFC First Bank, Federal Bank, Bandhan Bank, IndusInd Bank, Punjab National Bank, State Bank Of India, Au Small Finance Bank, and ICICI Bank, which were trading between 0.10%-3.31% higher.

While, the negative contributors to the index were Axis Bank, HDFC Bank, Kotak Mahindra Bank, and Bank of Baroda, which were all trading below 1%.