Nifty Bank sees profit-booking; 52,000 likely to act as support: Experts

The Nifty Bank closed in the red for the second day in a row on Friday as traders preferred to book profits at higher levels.

If the consolidation continues, the immediate support for the index could be placed at 52,000, suggested experts.

The Nifty Bank fell 469 points to close at 52,342 while the Nifty50 closed 33 points lower to hold 24K.

SBI, Bank of Baroda and PNB were among top gainers while selling was seen in Kotak Mahindra Bank, ICICI Bank and Axis Bank.

“The Bank Nifty index experienced its first meaningful correction after a nonstop rally in the past week. For the selling pressure to continue, there needs to be follow-up selling; otherwise, the index may get stuck in a consolidation range,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

“The immediate support is at 52,000, where the highest open interest is built up on the put side, while the immediate resistance lies in the 52,700-53,000 zone,” he said.

The Nifty Bank opened higher and quickly reclaimed the 53,000 mark but it failed to hold the momentum and closed above 52,300.

“Familiar sight is being witnessed right now that whenever Bank Nifty’s price action is away from its 5-day moving average; we see profit-booking and consolidation taking place,” said Bhavik Patel- Senior Research Analyst, Tradebulls Securities.

“Today (Friday) the same thing has played out where after closing in negative on Thursday, bulls were unable to charge and extend the rally,” he said.

“The Nifty Bank is in an overbought zone, we were advising not to carry any overnight positions but keeping trades intraday and light. We reiterate the same advice as the market still feels stretched with lack of any fresh triggers,” highlighted Patel.

An increase in CE writing at 53,000 and subsequently shedding of PE at 53,000 indicates a strong hurdle. PCR ratio also has been falling from 1.48 on 25th June to 0.67 with decreasing IV, which is indicative of unwinding of Puts.

“51,800 is the immediate support which is the low made on 25th June while resistance is at 53,000. Bank Nifty will look to find a bottom around 52,000-51,700,” he said.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)