Will Bank Nifty be on an upmove this week?

Bank Nifty witnessed a volatile week as it moved about 1,700 points in just five trading sessions, which was a move of almost 5 per cent. One of the key reasons for such a splendid recovery was RBI Monetary Policy meeting. The highlights of the event favoured the index and it shot up by nearly 500 points. The low for the week was 35,696 while the high stood at 37,397.  

On the weekly chart, Bank Nifty formed a morning star pattern, which indicates bullishness. Despite FIIs selling the banking stocks heavily, we find that Bank Nifty has actually outperformed Nifty on a weekly basis. In the end, it was a good week as it ended on a positive note.  

So, let us throw light on the performance of Bank Nifty this week. An important point to watch out for would be the FII selling. If FIIs turn out to be the net buyers, we would see Bank Nifty performing extremely well as FIIs hold a major stake in the banking stocks.   

On the derivatives front, the 38,000 call option had the highest option interest, followed by an in-the-money call of 37,000 strikes. On the put side, the 37,000 put option continued to have the highest open interest, which was followed by the 36,000-strike. Also, we had witnessed the market participants creating 37,000 straddles on Friday as the highest change in the open interest was seen on these strikes. So, for this week, it can expect a broad range of 36,000 to 38,000. The PCR is at 0.89, which shows little bearishness. Given the fact that Bank Nifty made volatile moves last week, volatility cannot be ignored. If the last week’s high of 37,400 is broken, we can expect 38,000 to be tested soon.