How to trade PSU bank stocks after recent rally? Anand James does the chart reading
PSU bank stocks, pullback seems likely in over stretched stocks like PNB, Bank of India, IOB and Central Bank, says Anand James, Chief Market Strategist at Geojit Financial Services.
“The recent rallies in the PSU bank index have pushed the 14-D RSI above 70. A Doji candle formed in the daily time frame warrants indecision,” he says. Edited excerpts from an interview:
Unlock Leadership Excellence with a Range of CXO Courses
Offering CollegeCourseWebsiteIIM LucknowIIML Chief Marketing Officer ProgrammeVisitIndian School of BusinessISB Chief Technology OfficerVisitIndian School of BusinessISB Chief Digital OfficerVisitWe saw Nifty getting huge support from banks and IT stocks last week. Do you see strong resistance coming around the 20,200-level or will the momentum continue towards 20,500?
We had gone in last week with 20230 or 20600 as the upside objectives, and were reasonably satisfied with what Nifty came to achieve despite all traditional indicators blaring signals of being overbought. This has transpired on the back of low volatility expectations, as indicated by subdued VIX through the week. However, a shortened week ahead (Tuesday being a trading holiday), with Fed rate decision arriving in the middle of the week presents the ideal environment for bears to regroup, and challenge all those counters which had surged unchecked so far. We will test the premises of this construct by watching if Nifty manages to float above 20180. If unable to do so, 19550 could emerge as a downside objective, but the prospects of 20600 would continue to be very much alive, as long as 20000 holds.
While both Sensex and Nifty have hit new highs, Nifty Bank is yet to drive past its previous peak of 46,369.50 touched on 24 July. How to trade
