Nifty Bank Loses Momentum Below 60,000; Distribution Signals Near-Term Caution

The Nifty Bank index is showing early signs of fatigue after a strong run-up, as global uncertainties and profit-taking weigh on sentiment. Renewed risk aversion, triggered by reports of a proposed 500% tariff on purchases of Russian oil, has led to cautious positioning, with market participants increasingly booking profits at higher levels.

Market Snapshot: Bulls Lose Grip at Higher Levels

Nifty Bank continues to experience a pause in its broader uptrend, with intraday recoveries proving short-lived. Every bounce has been met with fresh selling pressure, signalling waning bullish conviction near record highs. While aggressive panic selling is yet to emerge, the price action suggests growing exhaustion in the recent rally.

The index has failed to close above the previous day’s high for four consecutive sessions, a clear sign of distribution. Thursday’s session remained bear-dominated, with Nifty Bank declining 304.35 points to close at 59,686.50, reinforcing the view that near-term downside risks are building.

Technical View: Break Below 60,000 Raises Caution Flags

From a technical perspective, the structure has weakened marginally but meaningfully. The repeated inability to surpass prior session highs reflects sustained selling interest and cautious trader behaviour.

The slip below the psychological 60,000 mark has amplified downside concerns. The index has also failed to sustain its earlier breakout and is now hovering near a critical confluence zone defined by:

• The 20-day Exponential Moving Average (EMA)
• The 50% Fibonacci retracement level

Any continuation of selling from this region could further weaken the short-term trend. Additionally, the earlier support zone has now flipped into overhead supply, reinforcing the pattern of rallies being sold into.

The 60,000–60,200 zone, once a strong demand area, has decisively turned into a key resistance corridor. As long as the index trades below this band, sellers are likely to retain control.

Momentum indicators echo this cautious setup. The Relative Strength Index (RSI) is hovering below the 60 mark, pointing to a gradual loss of bullish momentum. While 59,500 stands out as immediate support, a decisive breach of this level could intensify selling pressure.

Derivatives Snapshot: Options Data Caps Upside

The derivatives landscape aligns with the cautious-to-bearish undertone in the cash market. Call writers have aggressively added fresh positions at at-the-money and nearby strikes, effectively capping near-term upside.

In contrast, put writers have reduced exposure and shifted positions to lower strikes, signalling expectations of only tactical rebounds rather than sustained upside.

Key derivatives observations include:

• Open interest build-up of ~19.42 lakh contracts at the 59,500 put strike, marking it as an important near-term support
• Addition of ~14.68 lakh call contracts at the 60,000 strike, strengthening this level as a major resistance cap
• Put-Call Ratio (PCR) easing to 0.95 from 1.04, reflecting rising caution and growing dominance of call writing

This setup suggests limited upside potential in the near term, with any recovery likely to face resistance.

Market Outlook: Sell-on-Rallies Strategy Favoured

The broader trend for Nifty Bank has turned decidedly cautious, with the index struggling to sustain higher levels. The failed breakout attempt and the emergence of lower-high formations have dented confidence, leaving the overall structure fragile.

Persistent selling at elevated levels and swift absorption of intraday pullbacks indicate continued supply pressure. With the index closing below key psychological thresholds, downside risks remain pronounced.

The 59,500–59,600 zone now emerges as a crucial support band, backed by the confluence of the 20-day EMA and the 50% Fibonacci retracement. A decisive breakdown below this area could open the door for a deeper correction toward the 59,000 mark.

On the upside, any meaningful revival in bullish positioning is likely only if the index regains and sustains above the 60,200 level. Until then, a sell-on-rallies approach is expected to remain the preferred strategy in the near term.