Buyers Active on Dips, Yet Resistance Hurdles Restrict Nifty Bank’s Upside

The Nifty Bank index witnessed a modest rebound from its intraday lows on Friday as buyers showed interest on declines, hinting at the formation of a temporary base near the key support zone of 57,300–57,500. However, despite the short-covering-led recovery, the index continues to face multiple overhead resistance levels, keeping the overall tone cautious and limiting the upside potential.

Market Recap

The index gained 322.55 points to close at 57,876.80, staging a smart recovery from lower levels. Yet, it remains below the psychological barrier of 58,000, a level that continues to cap bullish attempts. The persistent failure to close above the previous day’s high for six consecutive sessions underlines sustained selling pressure and the lack of follow-through buying strength.

The lower-high and lower-low formation remains intact, signaling that short-term structure still favors sellers, even though buyers are selectively active at lower support levels.

Technical Analysis

From a technical standpoint, Nifty Bank is trading within a consolidation range between 57,500 and 58,200. While buying demand emerges on dips, the lack of conviction above resistance levels restricts a clear breakout.

The index is currently holding above its 20-day exponential moving average (20-DEMA), reflecting buyers’ defensive presence on declines. However, a decisive close above the 58,200–58,300 zone remains essential to confirm a bullish reversal and negate the prevailing bearish sentiment.

• Immediate Support: 57,400 (aligned with 20-DEMA)
  
  
• Resistance Zone: 58,200–58,300
  
  
• Breakdown Trigger: Below 57,400 could invite renewed selling
  
  
• Reversal Confirmation: Above 58,200 may spark short covering
  

The RSI (14) currently hovers near 60, signaling cautious optimism but also showing waning momentum amid a continued lower-high structure. Hence, volatility is expected to persist until a clear breakout emerges on either side.

Derivatives Data Overview

Derivatives positioning paints a picture of neutral consolidation with both call and put writers actively building exposure:

• Call Writers: Heavy open interest (OI) buildup of 15.24 lakh contracts at the 58,000 strike, confirming strong resistance.
  
  
• Put Writers: Increasing exposure at the 57,000 strike with 12.73 lakh OI contracts, suggesting limited downside support.
  
  
• PCR (Put-Call Ratio): Rose to 0.90 from 0.83, signaling a cautiously balanced sentiment between bulls and bears.
  

The simultaneous rise in both call and put writing underscores a sideways market setup, where traders prefer range-bound strategies over directional bets.

Market Outlook

The recent rebound indicates a temporary base formation near strong supports, yet the absence of decisive follow-through buying suggests that momentum remains fragile. The index continues to oscillate within a well-defined band, with sellers defending higher zones and buyers accumulating near supports, keeping the broader trend neutral to mildly bearish.

Until Nifty Bank decisively closes above 58,200, traders should remain cautious. A break below 57,400 could reignite selling pressure, while a breakout above 58,200 may trigger short covering and open the door for higher levels.

Trading Strategy

• Approach: Neutral-to-cautious
  
  
• Bias: Range-bound with mild bearish undertone
  
  
• Action Plan:
  
  
  • Sell near resistance (58,000–58,200) with tight stops
    
    
  • Accumulate near 57,400–57,500 with confirmation from intraday momentum
    
    
  • Avoid aggressive directional trades until a breakout confirms
    

Key Takeaways

• Nifty Bank remains in a sideways consolidation phase.
  
  
• 58,200 is the key breakout level for bulls.
  
  
• 57,400–57,500 acts as crucial near-term support.
  
  
• Momentum indicators signal cautious optimism, but conviction remains weak.
  

Traders should maintain discipline and patience amid range-bound conditions.