Nifty Bank

Still some more time to have trust in PSU Banks

Markets had been pretty range bound since the UP election results were out in mid-march, but finally we gave a breakout today and closed at new life highs. Who has led the breakout? Banking Sector! So lets talk about Nifty bank in my today’s post.

As we all could notice in the Daily chart of Nifty Bank, we are about to give a breakout from a Channel.  This was a long channel with a time wise stretch of almost 3 months starting from Early February which is on the edge of rally breakout tomorrow over 22140 on spot level.  Banking stock has been in good momentum since last 3 weeks but who could lead breakout in Nifty Bank? PSU Banks……………..!

On MoM rally which we got on nifty bank from almost 16000-22000 was lead by private sector banks like Indus Ind, Yes Bank, HDFCBANK, Kotak bank and just one PSU Bank SBI. Other Mid-cap and PSU Banks were lagging rally due to NPA concerns. But as we have already seen banks following Swacch Bharat on their NPA’s, we are getting attractive deal on Risk: Reward for long term on such banks. I Had been pretty much avoiding trades in such banks but now i would surely keep them in my watch list for trading purpose.

Lets check out PSU Bank Index

So when we are witnessing Niftybank closing above its own high of 2015 , PSU bank index is still far away from 2015 high and then we could think of it catching up with its own private peers. As we all could notice in weekly chart of PSU Bank index, we have almost witnessed a inverted h&S bullish reversal pattern. This clear suggest that we are going to get some good medium term trends from PSU Bank stocks. The index is expected to kiss 4800 from current levels of 3540 from pattern breakout. So any dip in quality PSU bank stocks is a buying opportunity for 6 months.

Strategy: Buy stocks like Bank baroda, SBI, Andrabank and mid-cap bank like federal bank for a 6 months time with stop loss on PSU Index at 3270 

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