In the last 6 months, right from Feb 2016 both Bank Nifty and Nifty have been on a continuous bull run. Bank Nifty has moved from 14000 to 20000 levels and Nifty have moved from 7000 to 9000 levels. In this bull run, Bank Nifty has significantly outperformed Nifty. During Feb 2016, Bank Nifty to Nifty ratio was close to 2.0 and now it is currently trading close to 2.30 levels. So the ratio has moved up by 15%, which means Bank Nifty has out performed Nifty by 15%. The main reason for this is the outperformance of banks and financials that constitute the Bank Nifty. On the other hand Pharma and IT, the major components of Nifty have underperformed significantly.
Below is the ratio chart of Bank Nifty to Nifty. From the chart you can see that on 26 Jan 2015 the ratio hit its lifetime high of 2.31 and then on it started correcting and reached 2.13 on 25 Feb 2015. This is about 9% correction. That is Bank Nifty got corrected 9% than Nifty on relative basis. Similarly, On Nov 2015, it crossed 2.2 and corrected till Feb, 2016 and reached 1.94 levels. This shows that whenever the ratio crosses 2.20 level there is a significant resistance. Resistance either leads to correction or stagnation.
As said earlier, post the bull run in last 6 months, Bank Nifty to Nifty ratio has moved from 1.94 in Feb 2016 to 2.29 level currently, which is closer to its previous lifetime high. The above chart shows how strong the bull run has been.
Added to this, the SD has also crossed 2.5 SD in the last few days.
Considering all these factors, it looks like Bank Nifty is set for an underperformance against Nifty from here on.