Nifty PSU Bank surges above 200-DMA

The Nifty PSU Bank index, which is known as the backbenchers of the market has surged above its 200-DMA for the first time after July 22, 2019. The index was trading below its crucial 200-DMA level since last 329 trading sessions.

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.

On Wednesday, the Nifty PSU Bank has jumped 3.57 per cent to close above 1,500 mark for the first time since September 04, 2020. 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. Interestingly, in the recent throwback phase, the RSI has taken support at 60 level and witnessed bounce back, which indicates that the index is in a super bullish range as per RSI range shift rules. The daily MACD stays bullish as it is trading above its zero line and signal line. Moreover, the daily stochastic oscillator is also suggesting some bullish strength as %K is above the %D.

Overall, the trend is up with bulls in the driving seat. On the downside, keep a close eye on the level of 1400, followed by 1369 as these are the most important support levels.

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 PSU Bank constituents.