While the entire focus has been on the Nifty crossing the 25,000 mark and even sustaining above it, the key catalyst behind it is quietly going about its business and is just a few good sessions away from reclaiming its record high levels. We're talking of the Nifty Bank, which has surged over 5,000 points in just the last seven sessions, and is now within striking distance of two very important milestones.
The index is now 250 points away from reclaiming the 60,000 mark. The last time it had closed above that level? February 27, a day before the Iran war began. In fact, the index is also just 2,000 points away from 61,764 as well, its previous record high.
That too does not seem very far off, considering the way the index has moved over the last few sessions. Same is the case with the Nifty Bank constituents as well. While everybody has continued to focus on the recovery that HDFC Bank has seen from its recent lows, ICICI Bank has quietly gone about its business, gained 20% in the last one month, and is now trading at record high levels.
Vatsal Bhuva of LKP Securities said that following a decisive breakout above its recent swing high, the Nifty Bank continued to move higher, indicating sustained buying momentum, and although the RSI has entered the "overbought" zone, raising the possibility of a near-term retracement, there currently are no signs of weakness.
He advises traders to continue holding existing long positions with a trailing stop loss of 59,000, while 60,000 on the upside remains an immediate resistance. 59,000 - 58,800 are seen as crucial supports. He expects the index to test 61,000 - 61,500 in the short-term.
The Nifty Bank's RSI has continued its upward trajectory, while the uptick in its ADX has further reinforced the strength of the prevailing bullish trend. The 59,200 - 59,300 zone will act as an immediate support area, while on the upside, 60,300 - 60,400 level remains a key resistance band, according to Sudeep Shah of SBI Securities.
"A decisive and sustained breakout above this zone could pave the way for further upside towards 60,800, supported by continued short-covering and positive momentum," he added. For the market in itself, there are plenty of moving parts to react to - One being the rally seen on Wall Street on Monday, the extended fall in crude oil prices, with Brent now slipping below the $90 a barrel mark, and some result reactions that will be seen as well, as we head towards the fag end of the earnings season for the quarter.
Cochin Shipyard, Whirlpool of India, Kalyan Jewellers, are some of those names. IIFL Finance will also be a stock to watch after the mega Blackstone deal. A lot will also depend on the Foreign Institutional Flow figure, as they pumped in another ₹7,000 crore-plus on Monday, taking the total recent buying closer to the ₹60,000 crore mark.
The Nifty, having closed above the 25,000 mark yet again, would want the bulls to defend that level on Wednesday, while the 24,850 - 24,900 level is turning out to be an important support, as was witnessed during Monday's extremely volatile session. Shrikant Chouhan of Kotak Neo said that the non-directional activity on the Nifty may continue as long as the index trades within the 24,800 - 25,080 range.
On the upside, a successful breakout above the 25,100 range could push the market higher towards the 25,200 - 25,250 range, while profit booking may accelerate in case the index slips below the 24,800 mark, dragging it down to 24,700 - 24,625 levels.