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Bank Nifty to outperform, test 38000 levels

ICICI Securities 19 Apr 2022

Commentary

On the back of geopolitical uncertainty, major indices violated their sizeable Put bases. However, despite selling in heavyweights, the volatility index remained subdued and rose only on April 18 but failed to sustain above 20 levels. Lower-than-expected numbers from technology stocks kept the Nifty under pressure but money flow shifted to the banking space, which has relatively outperformed.

Major option concentration:

Major Call OI: 37000 (14.5 lakh), 37500 (5.2 lakh) and 38000 (2.79 lakh)

Major Put OI: 37000 (5.6 lakh) and 36500 (9.89 lakh).

What is expected from Bank Nifty:

For a major part of the April series, the Bank Nifty has performed better despite the sharp sell-off in HDFC Bank. Other private banks along with PSU kept the momentum intact where Axis Bank outperformed and moved above its highest Call base of 800. Despite violating its highest Put base of 37000, no closure in OI positions were seen. There was further writing in 37000 strike Put suggesting that the index should move above these levels soon. Other private banks are trading near there sizeable Call bases and ahead of the numbers, there would be shifting of Call writing positions to higher strikes, which should provide more steam to the stocks. We feel there are limited downsides in the Bank Nifty and it is likely to head towards 38000 levels in a few days.

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