Nifty Bank rally may continue up to 31,200 level, investors should follow 'buy on dips' strategy

On account of foreign institutional investors (FIIs) pumping around 50 per cent of their net investment in the Indian banking equities, the Nifty Bank index has scaled to its all-time high. As per the equity market experts, the FII faith in the banking equity is expected to continue as they have started to assume in sync with the opinion poll results that Lok Sabha results would be in favour of the current NDA government. The index Nifty Bank may touch 31,200 levels by the end of May 2019 or maybe before that.

Giving details of the FII investment in the Indian equity market and its lion share going to banking stocks Prakash Pandey, Director & Head of Research at Fairwealth Securities told Zee Business online, "In March 2019, FIIs have invested around Rs 30,000 crore in the Indian equity market. Out of this equity investment around 50 per cent have gone to the banking stocks." 

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Asked about the reason for banking stocks rally into the Indian indices Pandey said, "Appreciating rupee against the US dollar and bond markets are helping Indian banks to strengthen their fundamentals. However, the majority of the opinion polls suggesting Narendra Modi led NDA government coming back to power have further fuelled the FII investment into the Indian equity markets. Pandey also said that out of the 50 per cent FII investment going to banking stocks, around 75 per cent of the FII investment in banking stocks have been attracted by four private sector banks namely — HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank. "The bull run in the Nifty Bank is expected to continue till the Lok Sabha results are announced i.e. May 2019," said Pandey.

Expecting the bull run in the Nifty Bank to continue Chandan Taparia, Derivative & Technical Analyst at Motilal Oswal said, "The Nifty Bank is still bullish and may show 30,500 levels soon and once it breaks this level we can expect the index to touch 31,200 very soon."

Suggesting market investors to apply 'buy on dips' strategy while investing in Nifty Bank Simi Bhaumik, a SEBI registered technical equity analyst said, "Any dip of around 200 to 300 points in the Nifty Bank index should be considered as an opportunity to buy rather getting panic over the correction. All the banking stocks have made their bottom and its time for the investors to take buy position in banking stocks and go long." However, she advised market investors to take stop loss at around 29,750 to 29,800 while taking a buy position in Nifty Bank index. Asked about the banking stocks she would recommend the market bulls Bhaumik said, "All banking stocks are bullish but Yes Bank, Axis Bank, ICICI Bank, HDFC Bank and SBI banks are expected to give more profit than other banking stocks."