Bank Nifty Forecast and Trend Analysis, August 28–September 1, 2023: The Indian stock market had a volatile week. Global weakness and a rise in US 10-year bond yields made things worse. Despite starting strong on Monday, both the Nifty and Sensex faced strong selling pressure at higher levels the rest of the week.
The only consolation is that Nifty Bank closed well above the 44000 mark on a weekly basis.
- Key Takeaways
- Movement of the Bank Nifty Last Week
- Bank Nifty Forecast for Next Week (August 28–September 1, 2023)
- Nifty Bank Support and Resistance for Next Week
- Bank Nifty Options Chain Data
- Bank Nifty’s Put-Call Ratio (PCR) and Outlook
- What Factors Will Impact the Bank Nifty Forecast Next Week?
- Conclusion
Key Takeaways
- Price Action and Downtrend: Despite hopeful signs of recovery in Bank Nifty’s price action, the downtrend persisted.
- Options Chain Data: Bank Nifty’s options chain data points to a wide trading range, accompanied by lingering bearish sentiment.
- PCR Stability: The Put-Call Ratio (PCR) maintains its level, signaling the likelihood of minimal influence on Bank Nifty’s direction.
- Global Factors and Expiration: Global influences and domestic cues hold the key as the monthly expiration approaches for the Bank Nifty.
Movement of the Bank Nifty Last Week
The share price of Bank Nifty last week indicated optimism for a robust recovery. But it was a temporary excitement that faded before buyers were able to take pleasure in the surge. Even though the week wasn’t great, the weekly closing was positive, up 0.86 percent.
Throughout the week, Bank Nifty’s trading was primarily sluggish. Monday was the exception because it opened the gap and closed with a strong green candle. The index ended the week at 44231.45 after swinging between a low of 43862 and a high of 443949.9.
Bank Nifty Forecast for Next Week (August 28–September 1, 2023)
The Bank Nifty’s hourly, daily, and weekly charts do not show any sort of strength to initiate fresh longs. Also, the 5- and 10-day moving averages indicate a short-term bearish view. Bank Nifty’s multiple time-frame analyses failed to conclude on the buying side, though the weekly chart shows a little bit of a ray of hope.
But to confirm the reversal in Nifty Bank, the upcoming weekly closing must be above 45000. Otherwise, the outlook will again be “sell on the rise” until and unless the price breaks and sustains above 45000.
Nifty Bank Share Price Chart
When we examine the Bank Nifty chart on a daily time frame, it’s still in a downtrend. The 45,000 on the chart clearly show a strong rejection area. The chart made three consecutive lower highs (LH), which strongly supports its bearish setup on the daily chart.
So, to come out of the bearish setup, the Bank Nifty must close above 45000. Otherwise, the downtrend will continue and break below 44000. On the downside, the most important level will be 44000–43800, followed by 43500. Below 43500, the chart structure will be weaker and more vulnerable.
As of right now, on the upside, 44400 will be the first important resistance to break for a further rally. Above 44400, the next barrier will be between 44800 and 443949.9 (the high of last week). By closing above these, the Bank Nifty can easily add another 300–500 points on the upside.
So, after analyzing the price actions of the Bank Nifty, it shows a bearish view for the next week. But my bearish view will change once it breaks and closes above 44400, at least above the first hurdle. Till then, the bearish setup of the Bank Nifty will persist, but one must also keep a close eye on 44000.
Unless the Bank Nifty share price breaks either 44000 or 44400 on closing, the index will spend time eroding premiums ahead of August’s monthly F&O expiry.
Nifty Bank Support and Resistance for Next Week
| S3 | S2 | S1 | PIVOT POINT | R1 | R2 | R3 |
|---|---|---|---|---|---|---|
| 42657.73 | 43259.87 | 43745.63 | 44347.77 | 44833.53 | 45435.67 | 45921.43 |
Bank Nifty Options Chain Data
According to Bank Nifty option chain data, 44000 PE and 46000 CE have the highest open interest. Because of the current monthly OI positions, the Bank Nifty’s range appears to be fairly broad.
But last week there were plenty of call writings and put buying. Considering the available data, the bears were quite certain that the Bank Nifty would see future weakness.
Also, read last week’s Bank Nifty weekly forecast and trend analysis
Bank Nifty’s Put-Call Ratio (PCR) and Outlook
The Bank Nifty’s put-call ratio (PCR) is 0.81, which is negative and nearly the same as how it was last week. However, there is also very little chance that PCR will cause significant drops in Bank Nifty. According to the PCR, we should keep buying on falls like we did last week.
What Factors Will Impact the Bank Nifty Forecast Next Week?
Again, the Indian stock market will get cues from the global markets next week. How US markets perform next week in the face of potential future Fed rate hikes will be the most important factor.
Key Triggers
- GDP Growth Announcement: India’s Q2 GDP growth rate will be disclosed on August 31. 7.7% growth is predicted, driven by strong government investment and demand.
- Auto Sales Report: September 1 will see the release of monthly auto sales data. Expect increased sales as the festive season begins, but caution is advised due to lower August rainfall potentially affecting sales.
- Crude Oil Prices: Crude oil prices faced volatility due to global factors. Falling crude prices could positively impact domestic markets, so close monitoring is recommended.
- US 10-Year Bond Yield: While two-year rates, which are correlated to the outlook for monetary policy, jumped by almost four basis points, 10-year Treasury yields stayed stable at 4.231%, close to 16-year highs.
- FII and DII Flow: Foreign Institutional Investors (FIIs) were net sellers for the current month, while Domestic Institutional Investors (DIIs) were net buyers. DIIs supported the market against significant declines.
- Global Market Factors: Global markets saw mixed sentiment due to various factors, including tech stocks, central bank actions, and disappointing earnings reports.
- Upcoming Global Events: Keep an eye on US job data, GDP figures, inflation data, and manufacturing PMI releases from different countries, which could influence market direction.
Conclusion
This week, many factors may impact the Indian stock market, but the main attention will be on the India VIX before the monthly F&O expiry on Thursday. Traders need to be careful and calm when making trades. Also, keeping an eye on FII index positions daily will help avoid emotional trading in Nifty and Bank Nifty.
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Disclaimer: The writer is not a SEBI-certified research analyst. So, this blog post is only for academic purposes. So, before making any trading or investment decisions, one should obtain advice from a SEBI-certified research analyst.
