Nifty Bank Can Extend Rally Despite Kotak Mahindra Jitters. Here's Why
The benchmark equity indices extended gains for the fifth consecutive session on Thursday.
The Nifty Bank can extend Thursday's rally despite the jitters on Kotak Mahindra Bank Ltd. following the RBI's crackdown as public and private lenders have moved up and derivatives data flash signals of further uptick, according to Rajesh Palviya, vice president of technical and derivatives research at Axis Securities Ltd. "If we hold 48,500, the rally can extend to 49,000–49,200," he told NDTV Profit on Thursday.
Ten out of the 12 constituent banks in the index closed higher on Thursday. Only Kotak and AU Small Finance Bank Ltd. declined.
"Derivatives data in the last couple of days were giving signs the rally in Nifty and Bank Nifty can give a breakout from consolidation. We are going to register a new all-time high in (the) next couple of trading sessions," Palviya said. The target for the Nifty is 22,750–22,800, while the stop loss is set at 22,500.
The benchmark equity indices extended gains for the fifth consecutive session on the back of an advance in the shares of Axis Bank Ltd. and State Bank of India, even as those of Kotak plunged nearly 11%.
Market analyst Hemang Jani said it is possible the Kotak stock will underperform in the near term. "If it further corrects 3–5%, it will provide an entry point. We have seen IIFL Finance have a similar (regulatory) issue, and the stock corrected sharply by 30%, but then saw a good pullback in sometime."
He said a similar jump in Kotak could be possible as the stock has not performed for 12–15 months.
The multi-year support level for the stock is Rs 1,650 apiece and if it remains below it, there can be supply pressure towards Rs 1,600–1,580 apiece on the downside, according to Palviya. "Unless Kotak (does) not manage to cross Rs 1,730 level, it will remain under pressure."
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