Jan 27, 2024
Bank Nifty failing to break through 42,000; inflation, Adani saga, FIIs weigh heavy on index
Bank Nifty has fallen sharply, by 3%, YTD and is struggling to regain momentum. Traders and investors alike were concerned about the Indian banking sector’s exposure to the Adani Group, heightened inflation, and a shift in FII’s behavior. Some experts believe that the index is stuck in a sideways consolidation, failing to surpass the Budget day peak of 42,016.
What is causing dismay in Bank Nifty?
Bank Nifty is struggling to decisively cross and sustain momentum above 42,000. Even though banking stocks performed well in 2022, Amit Trivedi, CMT, Technical Analyst – Institutional Equities, YES SECURITIES said, “Previous year’s leader PSU bank index took a back seat, while most private banking stocks are going through the consolidation phase.”
Adani Rout
The Adani saga caused some concern in the banking industry as well. However, the outlook for the banking sector is still promising, and valuations are still not near the peaks of their good times; therefore, this consolidation or correction is a buying opportunity, added Meena.
Inflation
Inflation data from the US, UK, and India were released this week, and overall market sentiment is sideways to positive though inflation increased more than was expected in January 2023. Rameshver Dongre, Research Analyst – Equity Research, CapitalVia said, if we analyze the US inflation data, there is still a chance that the interest rates will rise in the near future which is the only thing that could be keeping it from breaking the 42,000 level.
Technical Outlook for Bank Nifty
A decisive breakthrough and sustenance above 42,000, along with improvement in the internal breadth of the Bank Nifty is essential for any sustained out-performance to set-in from the banking space stated Trivedi. Santosh Meena, Head of Research, Swastika Investmart said, “In the near term, 42,000-43,000 will act as a resistance area, but above this, we can expect fresh bullish momentum towards the 45,000 level. On the downside, 40,000 will act as a strong base.” Rameshver Dongre, Research Analyst – Equity Research, CapitalVia said he believes that upward movement is expected for the index, stating as long as it maintains above the 40,900 level, one can continue to have a bullish view on it. Currently, 41,500 to 41,700 is a good support range.
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