Nifty Bank likely to continue its outperformance rally this week too – here's what investors should know

The Nifty Bank may continue its outperformance rally this week too after closing positive for the last three consecutive weeks, several brokerages believe. The 12-share bank index has outperformed the market by gaining over 4 per cent in September 2022 against a 0.5 per cent rise in Nifty50. 

Out of 13 sessions so far in September, the Bank Nifty has reported positive closing on 8 sessions, besides, it also touched a new record high of 41,840-level last week on September 15, 2022. 

The outperformance in the Bank Nifty continued for a third week in a row where despite profit booking from higher levels, it fell relatively lower compared to the Nifty50, ICICI Direct Research said in its this week expectation.  

On Friday, the Bank Nifty moved below its sizeable Put base of 41000, however, despite a sharp sell-off, no closures were seen in ATM and OTM strike Puts, the domestic brokerage said, and believe the index would consolidate now and form a base near 40500, which should act as strong support. 

Both heavyweights and midcap banking stocks have managed to move above their Call bases amid buying momentum that helped the index to outperform last week, ICICI Direct further said. 

Bank Nifty is likely to take support around 40354 level whereas the previous target of 41406 remains as a resistance level, Equichain Wealth Advisors report suggests, adding that the index would continue to outperform as the domestic economy remains resilient. 

Similarly, another brokerage firm SMIFS Limited pointed out that the Bank Nifty is trading above previously established top is a positive development, and hence, range-bound oscillation with a positive bias likely to continue in the index. 

Zee Business Managing Editor Anil Singhvi said that the leadership in the markets shall come from Nifty Bank. He had earlier recommended investing in bank stocks on a positional basis for at least 20-25 per cent returns. 

With Nifty Bank hitting a fresh lifetime high, Singhvi said that the rally in banking stocks represents the power of the banking sector and the banking sector represents the power of the economy and the economy represents the power of our nation. 

As per Singhvi, strong credit growth and good asset quality are the two main reasons behind the growth in banks. With respect to banks’ growth, he estimated that for the next two quarters there is nothing to worry on these two fronts and advised to invest in them.