Will Nifty Bank show momentum in December?

Bank Nifty is hovering around its 200-DMA crucial support and any close below the average will mean further bearishness and one must expect the banking stocks to underperform further.

If there is one sector that has severely underperformed, then that is Nifty Bank. Talking about the performance, Nifty Bank has delivered 15.79 per cent returns YTD against 22.68 per cent of Nifty. In the past one month, Bank Nifty has plunged almost 9 per cent whereas Nifty fell 3.71 per cent. So, the question remains, why is the index underperforming so much?  

FIIs hold a major stake in banks. HDFC Bank and ICICI Bank, the index heavyweights, are being majorly held by foreign investors. Since the foreign investors are on the selling spree, naturally, these stocks are going to be hit majorly. It is evident from the fact that half of the constituents of Nifty Bank are trading under their 200-DMA.  

What’s next?  

Bank Nifty is hovering around its 200-DMA crucial support and any close below the average will mean further bearishness and one must expect the banking stocks to underperform further. However, it might find some consolidation if FIIs reduce their sell-off while short covering may trigger Nifty Bank to reclaim its 38,000-level.