A new bull run has just begun for the PSU Bank index: Rupak De

“A falling trend line breakout on the monthly chart suggests a new bull run that has just begun for the PSU Bank Index,” says Rupak De, Senior Technical Analyst at LKP Securities.

In an interview with ETMarkets, De, said: “On the higher end, a rise above 18605 may induce a decent rally towards 19630. On the other hand, a fall below 18100 may trigger a panic button in the market,” Edited excerpts:

What a week for Indian markets! Sensex hit a fresh record high on Thursday and then on Friday. What led to the price action on D-St?
The benchmark Sensex registered a new all-time high in November, crossing above the previous all-time high on the day of the November expiry.

So far, the headline index has gained 2.5% in the current month on the back of decent quarterly numbers from big-boy stocks.

More than 86% of stocks in the S&P BSE Sensex closed above the 200-DMA when the index hit a new all-time high, confirming the overall strength of the market.

Where do you see markets headed in the coming week? Any key levels that one should watch out for in the coming week, and the December series?
The sentiment remained positive as the index maintained above the previous swing high. Besides, the index value has remained above the crucial short-term moving average.

On the daily chart, the Nifty has reached the rising trend line found by joining the preceding peaks. The momentum indicator has reached the falling trend line on the daily timeframe.

Based on the price chart and momentum indicator setup we can infer that the index is on the verge of strong directional movement over the short term.

On the higher end, a rise above 18605 may induce a decent rally towards 19630. On the other hand, a fall below 18100 may trigger a panic button in the market.

In terms of sectors, Nifty PSU banks rose more than 6%. What is driving the rally in the PSU space?
PSU banks remained the darling of the street as the index continues to add to the monthly chart on the back of stellar quarterly earnings from SBI, Canara Bank, and BOB.

The index has had positive closes in four out of the last five months, showing the magnitude of the investors' optimism. Though the PSU bank index has already gained 166% since July, the rally still looks "young and beautiful".

Besides, a falling trend line breakout on the monthly chart suggests a new bull run that has just begun for the PSU Bank Index.

Top gainers of the week include Easy Trip Planners, and UCO Bank which were up 30%. What should investors do?
Both stocks have been consolidating since the end of the staggering rally in the preceding few days. The stocks have been sustaining above their important moving averages on multiple timeframes.

The current consolidation is likely to end in an upside breakout in the near-term. Therefore, the investor may choose to stay long with an exit option below the lows of the current consolidation.

Any strategy that traders can deploy for the coming week?
The Nifty IT index has just moved above 200-DMA, which is considered a long-term line of polarity by many traders and investors.

Besides, the index gave a symmetrical triangle breakout on the daily timeframe.

Therefore, the trend may remain strong in the IT space, and long-term investors may continue to return in the space.

Your 2-3 trading ideas for the December series?
Traders may keep an eye on stocks like Infosys, Escorts, and Container Corp for upsides in the December series.

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