Keep An Eye On Private Banks

Here's a daily line chart of the Nifty Private Bank vs Nifty 500 ratio testing its 2019 highs as momentum fails to reach overbought territory. Given that prices have just made new marginal highs and are failing to break decisively, we may see some near-term weakness in this ratio as it works through overhead supply.

Click on chart to enlarge view.

We've seen the Nifty Private Bank Index make new marginal highs on an absolute basis, however, after a more than 20% rally since late September it'll be tough for this rate of upside progress to continue. ICICI Bank, HDFC Bank, and Kotak Bank have been pulling a lot of the weight here as the other index components struggle to gain upside traction.

Without a broadening out of participation, the potential for a failed breakout in the near-term is significant.

Keep an eye on this space in the next few weeks. The waning upside momentum in the index itself and several components suggest to us that some backing and filling could occur as leaders like ICICI Bank take a pause.

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Allstarcharts Team