It was a remarkable week for Bank Nifty, as the index displayed consistent strength throughout the week. The banking heavyweight space single-handedly protected the benchmark Nifty from breaching key support levels during the first half of the week and eventually emerged as the key catalyst behind Friday’s broad-based rally. Bank Nifty ended the week with strong gains of over 4%, closing at 56815

The index has been exhibiting relative strength since last week, when it formed a higher bottom on the daily chart. The bullish momentum accelerated this week after Bank Nifty confirmed a “Symmetrical Triangle” breakout on Tuesday. Thereafter, prices crossed the May swing high, resulting in a clear “Higher Top–Higher Bottom” structure on the daily chart, reaffirming the prevailing uptrend. The sharp upmove has pushed prices above all key short- and medium-term moving averages, with the index now trading just below the long-term 200DSMA. During the previous rally in April, the 200DSMA acted as a strong resistance zone. However, this time the setup appears more constructive, as the RSI Smoothened indicator has already surpassed its April swing high, providing an early signal that the index may be preparing to overcome this hurdle. Another encouraging aspect is that, unlike the April rally where momentum indicators had entered deeply overbought territory, the current setup still leaves room for further upside before reaching extreme levels. Considering the strength in price structure, momentum indicators, and relative performance, we expect Bank Nifty to continue outperforming in the near term. While Friday witnessed broad-based buying across sectors, Bank Nifty remained the primary driver of market sentiment. Moreover, the Nifty–Bank Nifty ratio analysis continues to favour the banking space, indicating that the outperformance of Bank Nifty over Nifty is likely to persist. Traders can therefore continue to maintain a positive bias towards the banking sector and position themselves accordingly.

Rajesh Bhosale, Technical Analyst, Angel One