Bank Nifty surges above 200-DMA

The banking benchmark index, Bank Nifty has gained almost 3,441.90 points or 17 per cent from the low of 20,404.90, which was registered on September 24, 2020. On Friday, the index surged above its 200-DMA for the first time after February 28, 2020.

In technical parlance, the 200-DMA is considered important as it is one of the basic technical indicators that can be used to determine the long-term trend of security.

Bank Nifty traded in the range of 1,656.85 points during the week. The index ended the week with a robust gain of over 1,600 points or 7.19 per cent. The price action has formed a sizeable bullish candle, carrying a higher high and a higher low thereby, indicating the continuation of upside momentum in the index.

Talking about the indicators, the stock's relative strength index (RSI) has reached its highest value in the last 14 days, which is bullish. The daily MACD is above the zero line and the signal line. The MACD histogram suggests bullish momentum. And most importantly, the MACD line has crossed the prior swing highs.

Overall, the trend is up with bulls in the driving seat but do not get complacent and instead, keep a close eye on the level of 22,760, followed by 22,480 as these are the most important support levels.

Among the constituents of Bank Nifty, only HDFC Bank is trading above its crucial 200-DMA. A general observation is that when the index moves above or below its 200-DMA, the majority of stocks also follow the same trend. Hence, going ahead, we may witness some stock-specific action among Nifty Bank constituents.