Bank Nifty: Stochastic oscillator in extreme overbought zone

Most sought after index Bank Nifty extends its northward move for the sixth consecutive session and closed above 27,900 mark, on Monday. However, the stochastic oscillator is in an extreme overbought zone, which suggests the index may witness some consolidation before it makes any major upward move. Among the constituents, Federal Bank was the top gainer, while on the flipside, Indusind Bank was the top loser.

In the near term, the zone of 28,300-28,400 is likely to act as a crucial resistance. While on the downside, the zone of 27,390-27,290 is likely to act as support because the short-term moving averages, i.e. 13-day EMA and 20-day EMA is placed in that region.

Derivatives data suggests that among Bank Nifty Calls, the 28,200 strike price of March 14, 2019 weekly expiry is the most active call. Whereas among the Bank Nifty Puts, 27,800 strike price of March 14, 2019 weekly expiry is the most active Put. For the March 14, 2019 weekly series, the maximum open interest (OI) outstanding for Calls were at 28,200 strike price and that for Puts were at 27,500 strike price.