Analysts Note: Banking Stocks Vital for Nifty’s Continued Upsurge, Despite Recent Flat Performance Post New High.
The domestic benchmark showed a flat trend subsequent to the Nifty reaching an all-time high of 22,248 during the morning trade on February 21, mainly attributed to marginal gains in banking stocks.
During the opening deals, the Sensex and the Nifty were observed at 73,103 and 22,211, respectively. While the broader markets exhibited outperformance with the Nifty Midcap 100 and Nifty Smallcap 100 indices recording gains of up to 0.3 percent.
Analysts have noted that the bullish sentiment is anticipated to persist as long as the Nifty remains within the 22,000-22,100 zone. They emphasized that banking stocks will play a crucial role in driving the index higher.
According to Sameet Chavan, Head of Research, Technical and Derivative at Angel One, “The range-bound movement in the Nifty during most of the session reflects a cautious attitude at elevated levels, and a decisive move can only provide confirmation for the uptrend.”
Chavan mentioned from a technical perspective, the Nifty’s next potential breakout levels are anticipated to be around 22,350-22,400, with further upside targets at 22,500. These levels are being closely monitored as potential areas where the index could experience significant movement and potentially extend its uptrend.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the Nifty’s remarkable performance, marked by eight days of record intra-day highs this year, reflects its underlying strength. He attributes this resilience to robust domestic buying, which is the primary driver of the ongoing market rally.
Vijayakumar also highlights the positive signal emanating from fairly valued large private banks now contributing to the rally, indicating a broad-based market participation.
In sectoral terms, the Bank Nifty displayed strength by advancing 0.5 percent to surpass the 47,300-mark within the first hour of trading. This rise was propelled by gains in stocks like IndusInd Bank, ICICI Bank, Bank of Baroda, and Punjab National Bank.
Deven Mehata, Research Analyst at Choice Broking, anticipates short covering in the Bank Nifty index, particularly on the day of its weekly expiry. He advises traders to consider purchasing on dips with a strict stop loss of 47,000 on a closing basis for the Bank Nifty.
Additionally, sectoral trends show significant gains in the Nifty Realty and Metal indices, both surging over 2 percent. However, profit-booking was observed in Media and IT stocks.
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