Over the last five trading sessions, the index has been locked in a range of 53,000 on the downside and 54,800 on the upside. The index tried testing 55,000 last Friday amidst a slew of measures announced by the government and the Reserve Bank of India (RBI), but failed to break past it.
With the weak market sentiments on Monday and the underperformance of both HDFC Bank and ICICI Bank, the banking index reversed more than half of what it gained during that four-day period.
Despite Monday’s fall, the Nifty Bank managed to hold on to the 54,000 mark at close on the downside, and the bulls would look to defend that level on Tuesday. In case there is a rebound in the market in the initial stages, the bulls would first attempt to conquer Friday’s closing level of 54,496, before attempting to retest Friday’s high of 54,865. On the downside, 53,850 – 53,750 levels could act as a support zone, in case the 54,000 level does not sustain.
Is Nifty Bank a Buy Or Sell?
Although Vatsal Bhuva of LKP Securities said that there is buying interest in the Nifty Bank at lower levels, the lower top formation remains intact on the charts, suggesting that the broader trend lacks bullish conviction.
He expects the index to remain sideways in the near-term with resistance seen around the 50-DMA of 54,450 – 54,500 levels and support remaining at the 53,600 – 53,500 mark. He advises level-based trading for day traders.
Om Mehra of SAMCO Securities has noticed that the Bollinger bands on the Nifty Bank are visibly contracting, a pattern that usually precedes a sharp directional move in either direction in the coming sessions. The RSI at 47 indicates a lack of clear direction.
He sees immediate support at 53,700 and 53,500 levels, while on the upside, 54,500, followed by 54,900 will act as key hurdles. “A breach of support levels would confirm a bearish outlook and may open room for a sharper decline,” he said, adding that until a clear breakout from the Bollinger bands contraction occurs, the index is likely to remain volatile.
