Bank Stocks Rally

Private sector banks' outlook is brighter on a relative basis, and the players will outperform benchmark indices from a 6-12 months' perspective, analysts say

State-owned lenders, which hold large quantities if G-Secs, to face brunt of yield spike

Bank of Baroda, Canara Bank, and State Bank of India may see even better returns as they have also broken out of "Double Bottom" pattern

Analysts opine that Monday's rally in banks is a sign of investors digesting decline in Covid-19 cases

The Nifty Bank index, which was the top performing index on the National Stock Exchange (NSE), jumped nearly 730 points, or 2 per cent, in the intra-day deals to hit a new 36,837 levels

Analysts at BofA Securities have upgraded Axis Bank, IndusInd Bank, and State Bank of India (SBI) on a "surprisingly" resilient asset quality outlook, and reasonable valuations

Shares of ICICI Bank hit an intra-day high of Rs 421 after the lender reported a six-fold jump in the standalone net profit at Rs 4,251 crore for the quarter ended September 2020

August Futures and Options (F&O) series, which ended on August 27, saw strong participation from banking sector underlying optimism in the space

Here's a look at what major technical indicators suggest for Nifty Bank and its key constituents and what should be your trading strategy

On the technical charts, Bank Nifty made a 'Double Bottom' pattern at around 17,000 levels on May 22, which indicated that a rally was bound to happen, says Nandish Shah of HDFC Securities

Additionally, sentiment at D-Street was bolstered by the latest amendments approved by the Cabinet Committee of Economic Affairs with respect to the Insolvency and Bankruptcy Code (IBC).

However, some financial stocks, with weak fundamentals, missed the rally. For instance, Indian Bank, YES Bank, and Indiabulls Ventures slipped up to 9 per cent.

Most analysts, however, see this as a temporary balm and expect pressure on banking stocks to remain, given the other structural headwinds