Nifty Bank Loses Momentum; Bearish Undertone Persists Amid Sustained Call Writing

Nifty Bank Shows Signs of Fatigue Near Key Support

The Nifty Bank index stands at a crucial juncture, showing early signs of profit booking and weakening bullish momentum. For the fifth consecutive session, the index failed to close above the previous day’s high — a clear signal of fading buying strength and persistent overhead supply.

On Thursday, Nifty Bank fell 272.80 points to close at 57,554.25, marking yet another session below the prior day’s low. The index now hovers near its make-or-break support zone, with repeated rejections from the descending trendline resistance, reflecting growing caution among traders and institutions.

Failure to hold above the current support levels could erode buyer confidence and pave the way for a deeper corrective phase in the near term.

Technical Setup: Bears Gain Control

From a technical perspective, the index is showing clear signs of exhaustion after a prolonged rally. It is now trading below the 10-day exponential moving average (10-DEMA) — a bearish signal that indicates a loss of short-term momentum.

As long as the index fails to close above the 58,200–58,300 resistance zone, sellers are expected to retain control, using minor rebounds to initiate fresh short positions.

• Immediate Support: 57,500 — a critical base for the index
  
  
• Next Support: 57,200 — if broken, could trigger stronger downside momentum
  
  
• Resistance Zone: 58,200–58,300 — key for reversing short-term weakness
  
  

A decisive close below 57,520 could confirm a breakdown, while a sustained move above 58,300 would be required to negate the bearish bias and revive buying interest.

Momentum Indicators Show Weakness

The RSI (14) continues to drift lower toward 56, forming a lower-high pattern, suggesting waning strength and potential for further downside.
Momentum oscillators and volume trends indicate that the bullish energy is fading, and any near-term recovery is likely to face selling pressure near upper resistance bands.

Derivatives Snapshot: Call Writers Dominate

The derivatives data paints a cautious picture:

• Call writers have aggressively built positions at higher levels, particularly at the 58,500 strike, which has seen an open interest (OI) buildup of 10.66 lakh contracts, acting as a strong resistance ceiling.
  
  
• Put writers have trimmed their exposure at previous strikes and shifted positions lower, signaling a defensive tone and lack of conviction among buyers.
  
  

Meanwhile, the Put-Call Ratio (PCR) has slipped to 0.78 from 0.83, highlighting rising caution and an environment where sellers maintain control at higher levels.

Market Outlook: Neutral to Bearish Bias

The Nifty Bank index continues to display signs of fatigue and short-term weakness. Persistent supply near upper levels, along with sustained call writing, suggests that sellers remain active while buyers are increasingly hesitant to defend key supports.

A decisive break above 58,300 is necessary to revive bullish momentum, while a drop below 57,520 could confirm a short-term breakdown, intensifying the selling pressure.

Until a breakout occurs, the broader market tone is expected to stay neutral to mildly bearish, with a sell-on-rise strategy being the most effective approach.

Trading Strategy

• Approach: Sell on rise near resistance zones (58,200–58,300)
  
  
• Stop Loss: 58,400
  
  
• Target Levels: 57,500 → 57,200
  
  

Traders should maintain discipline and caution, as the current setup favors range-bound to bearish movement until a clear breakout or breakdown occurs.

Key Levels to Watch