MPC meeting outcome: What can we expect from NiftyBank

MPC meeting outcome has been to reduce the CRR by 0.5% to 4%. The repo rate has remained unchanged. To understand what this means we have to understand how this will effect the liquidity in the economy. CRR is the percentage of deposit in cash that has to be kept in with the bank. This money can't be lent to anyone. So, technically the bank has to give the interest on this reserve but won't be able to lend it and earn from it. This CRR reduction will allow the banks to lend this money and earn from the same. So this is a good move from the perspective of banks.

Based on the above logic, the banks are supposed to benefit from the decision. But can we expect the goodness to reflect in the share prices immediately? Will NiftyBank be bullish? Or has the market anticipated the news and we might see some profit booking?

Let's try to analyze the chart of Niftybank. In the 2 hour chart we can clearly see that the market is clearly bullish with prices trending above the 9 EMA and 20 EMA. Both the EMAs are diverging and hence the larger timeframe is super bullish. NiftyBank has cleared 52500 level. Any short setup above 52500 can have the target as 52500 as this level might act as a support.

Nifty Bank 2 hour chart

In the 15 minute chart, we can see that the market has gone sideways and is taking support from 53286. Short setups can occur below 53286. The price needs to show some rejection from this level to the downside or a liquidity grab above this level and then breaking the level to the downside. Remember, the target would be till 52500. The next level of movement will need some more prices action. We can discuss this when the price gets there.

For long trades, we can wait for the 53900 level to be cleared after some consolidation below it. If the price shows some rejection from this level to the upside then it will be a good intraday long entry. The target can be till the ATH for positional trades. So 54480 is possible in case there is bullishness.

Nifty Bank 15 minutes chart