Bank Nifty likely to see rally again; HDFC Bank in focus on RBI partially lifting ban

The weekly options expiry is here, one day ahead of normal as the market is closed on account of Muharram tomorrow. The biggest cue this morning comes from our reporter Ritu Singh with the scoop that RBI has lifted its ban on HDFC Bank partially and the lender can now go ahead and issue fresh credit cards. Why do I say this is the biggest cue? Let me explain:

The HDFC Bank stock accounts for nearly 10 percent on Nifty and nearly 30 percent on the Bank Nifty. It of course used to be even bigger but has lost out over the last months barring August when it made a bit of a comeback. This month the stock is up 6 percent and has taken back the leadership. The HDFC Bank ADR was up 1.6 percent compared to 1 percent decline in the Indian stock indicating that it should have about 2.5-3 percent gap up this morning. But what after that? I will let the market answer that because that’s a big question.

This month the Nifty IT is up 10 percent while the Bank Nifty is up only 3.7 percent but then this has been the trend through the year. The Nifty IT rallied 38 percent this year compared to only 15 percent gains for the Bank Nifty. However, we have seen around expiry days, there have been tactical rallies on Bank Nifty and it’s possible that today is one of those days. For that to happen though, the Bank Nifty will have to cross 36,200 and trade above that to force further short covering.