Analyzing India

Is This Key Index Likely To Play A Catch-Up?


The frontline NIFTY50 Index staged a strong breakout following eight weeks of strong consolidation. It has marked a fresh lifetime high and presently trades in uncharted territory.

For a bull run to sustain in a meaningful way, there has to be broad-based participation; especially from key sectors like banks and finance. However, we can see that one of the key indexes, NIFTYBANK (more popularly called BankNifty), has relatively underperformed the NIFTY on a relative note.

The present technical setup suggests that this key index is likely to play catch-up in the event of the markets consolidating and sustaining the present gains.

When benchmarked against the broader NIFTY500 Index, the NIFTYBank Index is showing a strong improvement in its relative momentum and is on the verge of entering the improving quadrant. If the present improvement in the momentum sustains, as well as if the Index enters the improving quadrant, it would mean an end to the relative underperformance of this Index.

The analysis of the daily chart shows that the NIFTY Bank Index is away from its lifetime high point of 37708. The recent price action shows the index consolidating in a sideways trajectory and sitting on the verge of a breakout.

The MACD is bullish and above the signal line. The PPO remains positive. The RSI is seen breaking out from a pattern resistance ahead of the actual breakout.

If the present strength in the general market sustains, there are greater chances of the present pattern resolving with an upward breakout. In this case, the possibility of BankNifty testing its previous high point cannot be ruled out. This would also mean that the breakout, if at all that happens, will also bring in a meaningful move in the key NIFTY Bank constituents like HDFCBANK, ICICIBANK, SBIN and KOTAKBANK.

Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst |

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Disclosure pursuant to Clause 19 of SEBI (Research Analysts) Regulations 2014: Analyst, Family Members, or his Associates holds no financial interest below 1% or higher than 1% and has not received any compensation from the Companies discussed.

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Milan Vaishnav
About the author: , CMT, MSTA is a qualified Independent Technical Research Analyst at his Research Firm, Gemstone Equity Research & Advisory Services in Vadodara, India. As a Consulting Technical Research Analyst and with his experience in the Indian Capital Markets of over 15 years, he has been delivering premium India-focused Independent Technical Research to the Clients. He presently contributes on a daily basis to ET Markets and The Economic Times of India. He also authors one of the India's most accurate "Daily / Weekly Market Outlook" -- A Daily / Weekly Newsletter,  currently in its 15th year of publication. Milan's primary responsibilities include consulting in Portfolio/Funds Management and Advisory Services. His work also involves advising these Clients with dynamic Investment and Trading Strategies across multiple asset-classes while keeping their activities aligned with the given mandate. Learn More
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