Nifty Bank Index rises on HDFC Bank surge, gains over 1.3%

The Nifty Bank index surged by 1.35% in today's opening trade, reaching the 52,876 mark, driven primarily by HDFC Bank, which advanced 3.66%. The rally in HDFC Bank shares followed a decline in its foreign institutional investor (FII) shareholding to below 55%, which analysts expect will lead to increased MSCI inflows.

LiveMint reported earlier that the FII holding in HDFC Bank's June 2024 shareholding pattern was a critical metric to watch. If the ownership dropped below 55%, it could result in an increased MSCI weight age. Currently, HDFC Bank holds an approximate 3.8% weight in the MSCI Emerging Markets index.

Also Read: HDFC Bank’s June quarter FII shareholding drops below 55%, MSCI weight set to increase

Given the announcement that the company may gain weight in the MSCI Index, Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, underlined that HDFC Bank would keep moving higher. The stock has the potential to continue seeing delivery-based purchasing for a few more days, which would push the price higher and give it additional durability. There will be more delivery-based purchasing by ETFs and active funds as HDFC Bank's weight in the Nifty 50 grows.

Also Read: Sensex tops 80,000 mark for the first time, Nifty 50 edges toward 24,300

The Bank Nifty index relatively underperformed in Tuesday’s session as the index corrected by three-fourth of a percent and ended the day below 52,200.

According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, a strong gap-up opening in HDFC Bank has led to a strong start to the Bank Nifty on its weekly expiry session. It seems after the last few sessions of consolidation, this heavyweight index has resumed its primary uptrend. Considering this momentum, it is expected that prices could further stretch towards 53,000–53,200 in the near term, where any dips should be a buying opportunity. 52,500–52,200 is immediate support.

Among the top five gainers on the Bank Nifty were Federal Bank (3.29%), HDFC Bank (3.20%), Axis Bank (1.98%), IDFC First Bank (1.34%), and Bandhan Bank (1.33%).

“While the broader trend still remains positive, this down move should be seen as a correction within an uptrend for now. The immediate support for the index is placed around 51,750, followed by 20 DEMA support at 51,200. The index could see a pullback from either of these supports, and hence, traders are advised to be watchful around these supports for buying opportunities,” said Ruchit Jain, Lead Research Analyst at 5paisa.

Also Read: HDFC Bank share price jumps over 3% to record high as FII shareholding lifts MSCI weight increase potential

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.