How will Nifty Bank perform next week?

On comparing with Nifty, we observe that the index is much more resilient to market fluctuations and has shown strength against the latter.

Nifty Bank lost about 289 points or 0.76% this week. On the weekly technical chart, the index formed a bearish candle with upper and lower shadows. It witnessed major resistances at higher levels of 38000 while it bounced back from the level of 37200. Moreover, the index didn’t breach its previous week’s low of 37346.80. However, the closing of the week has not been very positive as the index lost all the gains it got during the pre-opening on the day of expiry. On the daily technical chart, the index formed a strong bearish candle and lost about 500-odd points since it's intraday high. In comparing with Nifty, we observe that index is much more resilient to market fluctuations and has shown strength against the latter.

Observing the technical chart, we find that the level of 37200 shall act as the first support. If breached, the next support is at the level of 36800, which is its 200-DMA level. This moving average is considered strong support and any below this level will be met with strong reaction on the downside and will see the index fall towards the level of 36000. On the upside, 38000 will act as a strong resistance. In all the past five trading sessions, Nifty Bank has not been able to crack past this level and has receded every time it comes near to it. However, positivity will kick in if it takes out this level and we can expect the index to scale up to 38800.

Analyzing the F&O data for next expiry, the 38000 call option has the highest open interest. The PCR stands at 0.70 and indicates slight bearishness. Interestingly, straddles have been created at the strike of 37500, which has a combined premium of about Rs 800. Thus, we can expect the index to trade between 38300 and 36800 levels for next week with good volatility.

HDFC Bank is set to declare results on Saturday and will induce volatility in the index. Thus, corporate results will have a huge impact on the index and is likely to decide the trend.