Study of PSU Bank Index/actions that can be taken by an investorFor last few weeks we have been looking at indices. By the study of a particular index we then try to determine about investing in components of that index or the stocks that from that particular index. In the series we will today have a look at PSU Bank Index.
PSU Banks and the index of PSU bank consisting of banks like Bank of Maharashtra, Canara Bank, CBI, Indian Bank, IOB, Punjab and Sind Bank, Punjab National Bank, SBI, UCO bank and Union Bank of India had a consistent run till the index reached a near channel top at 7418.75 from there it corrected about 11.5% and made a low of 6561(near channel bottom) recently.
After taking the support of 50 days EMA the index is seen to be rising again by giving 2 consistent Green candles to end the week. In the coming week if resistance of 6919 is broken by PSU Bank Index and we get a closing above 6920, there is a possibility of a proper 5 to 10% rally in the sector with resistance at 7092, 7265 and 7437. Consider 6574.15 as a support. If in case of a down turn due to local or global factors we get a closing below 6574 we might see a weakness in the sector.
The shadow of candles created this week looks positive for the upcoming week in this sector and RSI is also showing strength. In this we when we get indication of a sector becoming strong we should look at fundamental and technical strength of constituents of that particular sector and there is a possibility of making an investment pick from the same.
Thus using this model, you can try to determine tops of current rally or trend. You can reverse the process and try find of the probable bottom in case of downturn. Trend lines / Peaks / Valleys and Fibonacci levels will also give you probable supports and resistances in the path. You can become an expert by studying and drawing and reading charts every day. The more you practice the better accuracy you can achieve.
Disclaimer: Investment in stocks and mutual funds is subject to market risks, please consult your investment advisor before taking financial decisions. The data provided above is for the purpose of analysis and is purely educational in nature. The names of the stocks or index levels of spot Nifty mentioned in the article are for the purpose of education and analysis only. Purpose of this article is educational. Please do not consider this as a recommendation of any sorts.
