Nifty Bank tests 200-DMA; a close above 45,500 could trigger short-covering
Nifty Bank index bounces back after retesting 200-DMA in intraday trade on Wednesday to close flat.
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The index rose 67 points to close at 45,082, while the Nifty50 rallied over 200 points to 21,453.
Gains were seen in PNB, IndusInd Bank, AU Small Finance Bank, and SBI, while ICICI Bank, Axis Bank and IDFC First Bank saw some selling pressure.
The index recouped losses as it bounced back after retesting its 200-DMA placed at 44,650 on the daily chart. Now, a close above 45,500 levels could trigger a short-covering move, suggested experts.
«After a brief downturn, the bulls made a strong comeback, successfully defending the crucial support level of 44,500, where fresh put-writing activities were observed. Despite the rebound, the index is still navigating a downtrend,” said Kunal Shah, senior technical & derivative analyst at LKP Securities.
“A potential pullback rally towards the 45,500 mark is anticipated. However, a significant development would be the index closing above 45,500, triggering further short-covering moves towards the 46,000 level, characterised by the highest open interest on the call side,” he said.
What should investors do?
The Nifty Bank opened lower in morning trade to retest its long-term average and quickly bounced back towards 45,485. But, it failed to hold on to the momentum and closed with marginal gains but above 45,000.
The index is likely to consolidate in a range in the next few trading sessions, but it still underperformed the Nifty50, which closed with gains of over 200 points.
The index is heading towards oversold levels; hence, a pullback could be on the cards. But the broader trend could still be bearish.
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