Nifty Bank struggling to keep pace with Nifty. Rupak De explains what traders should do

As Nifty broke past its crucial resistance at 18,800, Nifty Bank faced difficulty in maintaining its position above 44000. “Over the past few weeks, it has been struggling to keep up with the Nifty index, which has consistently been performing better. The Bank Nifty's performance has been weaker compared to the Nifty,” says Rupak De, senior technical analyst at LKP Securities.

Edited excerpts:

We saw Nifty and Nifty Bank throwing up contrasting pictures in the week. Technically, how do you read this and what are the charts looking like for both indices in the week ahead?

Nifty has successfully broken above the important resistance level of 18800, indicating a bullish sign. Additionally, writers of call options have been observed covering their positions, suggesting a positive sentiment as the Nifty sustains its position above 18800. The moving averages are below the current index value, which further supports the bullish outlook. Furthermore, the momentum indicator has given a falling trend line breakout, indicating a potential increase in upward momentum. As long as the Nifty remains above the support level of 17700, the overall trend is expected to remain positive. However, a resistance level is anticipated at 19000, which may present a challenge for further upward movement.

Meanwhile, the Bank Nifty faced difficulty in maintaining its position above 44000. Over the past few weeks, it has been struggling to keep up with the Nifty index, which has consistently been performing better. The Bank Nifty's performance has been weaker compared to the Nifty.

Currently, there is a support level at 43700, and if the Bank Nifty falls below this level, it could lead to increased weakness in the banking sector. On the other hand, if there is a decisive move above 44250, it could trigger a strong rally in the banking space.

Do you see Nifty IT outperforming?
Nifty IT failed to perform well during the week. In fact, it underperformed the headline Nifty due to weakness in the large IT like TCS. Going forward, the weakness may persist as long as it remains below 29000. On the lower end, support is visible at 28300, below which further weakness may come in the space.

Realty index was the biggest sectoral winner in the week with many stocks at a 52-week high level. Do you see signs of the rally being overheated?

The Nifty Realty index has been consistently moving higher, showcasing a positive trend. On the monthly chart, it is currently trading at a multi-month high, indicating strong momentum. The overall outlook for the Nifty realty index appears to be extremely positive.

In this bullish market, any downward corrections or dips in the Nifty realty index might present buying opportunities for investors. There is a support level at 480, which acts as a potential bottom where prices may find support.

On the upside, there is a resistance level at 570, which may act as a barrier for further upward movement. If the Nifty realty index manages to break above this resistance level, it could signal a further bullish move.

Which are the top 2-3 ideas for the week ahead?

Buy Bharat Forge at Rs 837. Target price Rs 920. Stop loss Rs 800
Bharat Forge shares have shown positive signs in their price action and technical indicators. The stock is currently sustaining above the double bottom breakout level, which indicates strength in the upward movement. Moreover, a consolidation breakout on the daily chart suggests a potential continuation of the bullish trend. The Relative Strength Index (RSI) has undergone a bullish crossover, indicating increasing buying momentum. Additionally, the stock is maintaining its position above the 21-day Exponential Moving Average (EMA), further supporting the bullish outlook. In the short term, the stock is expected to move towards the 900-920. On the downside, a support level is identified at 800, which may act as a price floor during potential corrections.

Buy RITES at Rs 400. Target Rs 440. Stop loss Rs 380
RITES experienced a breakout on the daily chart, accompanied by a sharp surge in volumes. This indicates a strong upward move in the stock. The momentum indicator RSI showed a buy crossover, suggesting increasing buying pressure and strength in the stock. The stock has a support level at 380, which is expected to provide a cushion for any potential downside movements. The stock has a potential upside target of 430 to 450, indicating the possibility of further price appreciation.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)