Bank Nifty likely to outperform Nifty next week: Kunal Bothra

What happened towards the fag-end of the session on Friday? What a mammoth rebound we saw coming in, we are back to 10900 plus levels.

The good point about the market's move on Friday was that it had a lot of the largecap stocks participating other than just Reliance. That was one of the standout features of the market. The Nifty IT index took a bit of a breather, Reliance moved up in the last couple of hours of trading on Friday but the good part of the move came via the private banking space and that is going to be the hallmark of the next week of the market. Bank Nifty closed just above 22,000 mark. If it manages to sustain those kinds of levels, say even at the start of next couple of days for the coming week, then the traction or the market move could get more aggressive on the upside.

Although there is one derivative parameter which can prove to be an issue and that is the put-call ratio. The open interest put-call ratio on the Nifty for the weekly expiry or rather for the monthly expiry is at 1.6-1.62 levels. We can say that the markets are in overbought territory and which is why the put-call ratios are signalling those kinds of levels but then it is not a comforting sign for an options trader because generally higher put-call ratios tend to bring in more froth into the market. Let us see how the market behaves, Bank Nifty looks very attractive and that should be the tone for the next week.

Just as a trade on Bank Nifty what would you recommend to our viewers?
There is a breakout on the Bank Nifty. The 21,840 mark on the Bank Nifty was one of the key breakouts. Why I believe that Friday's move was a strong one because there was some sense of short covering which came across into these names. Even though the extent of short covering was not to the tune that you would have seen a big blow out move on Bank Nifty but nevertheless short covering has started for the private sector banks and that itself would be a good point to take note of. Assuming, the results for HDFC Bank spook another round of short-covering, then it could pass onto the other private sector banks as well. Then we can see a bigger move for the Bank Nifty. Next week you should see the Bank Nifty outperform the Nifty. The big underperformance which we have been talking about since the last two-three weeks, there's a chance that Bank Nifty could try and cover up this underperformance by a big margin.