Nifty Bank Breaks Three-Month Consolidation; Weekly Marubozu Signals Deepening Bearish Control

Market Recap

The Nifty Bank index faced intense selling pressure during the week, slipping below its three-month low and decisively breaking down from a prolonged consolidation phase. The index ended the week forming a bearish Marubozu candlestick on the weekly chart, clearly indicating strong bearish dominance and aggressive supply at higher levels.

Structurally, Nifty Bank continues to register lower tops and marked its fifth consecutive session without closing above the previous day’s high, reinforcing persistent weakness. The index also slipped below its 20-day Exponential Moving Average (EMA), signalling a clear loss of bullish momentum.

Although the index is currently hovering near its 20-week EMA and the key swing low support around 58,200, the inability to sustain above this zone increases downside risk. A decisive breach with follow-through selling below this level could further damage the structure and trigger sharper declines.

Recent rebound attempts have been aggressively sold into, with even minor pullbacks inviting fresh short positions—highlighting the absence of genuine buying interest. With the confirmation of a consolidation breakdown, the broader trend remains vulnerable. Unless the index decisively reclaims the 59,500 swing high, which also aligns with the 20-day EMA, selling pressure is likely to re-emerge on rallies.

Friday’s session was particularly brutal for bulls. The base-building efforts seen over the previous two sessions were completely negated as heavy, broad-based selling resurfaced. Most heavyweight banking stocks witnessed structural breakdowns, dragging the index sharply lower. Nifty Bank closed down 727 points at 58,473.10, reinforcing expectations of heightened volatility in the near term.

Technical View

From a technical perspective, downside follow-through remains firmly intact. The index has struggled repeatedly to regain strength above the 20-day EMA, which also coincides with a key swing high. The decisive breakdown from a three-month consolidation range, coupled with repeated failures during pullback attempts, confirms persistent selling pressure on rallies.

This price behaviour reflects a sell-on-rise market environment, with bears firmly in control and the broader trend remaining fragile. While intermittent short-covering rallies cannot be ruled out, any upside move risks turning into a bull trap unless the index decisively reclaims the 59,500 resistance.

The 59,500–59,800 zone, which earlier acted as a strong demand region, has now transformed into a critical supply area. On the downside, the 58,300–58,000 band stands out as an immediate support zone and represents a crucial make-or-break level for the index.

Momentum indicators continue to signal caution. The Relative Strength Index (RSI) is hovering below the 40 mark, indicating strengthening bearish momentum. A decisive breakdown below 58,000 could accelerate selling pressure, while any meaningful recovery would require a sustained move above the 59,300–59,500 resistance band.

Derivatives Snapshot

The derivatives setup reinforces the bearish undertone visible on the charts:

• Call writers have aggressively added fresh positions at at-the-money and nearby strikes, effectively capping near-term upside.
  
• Put writers have shifted positions to lower strikes, indicating expectations of a bearish-to-range-bound market.
  

A notable open interest build-up of around 13.09 lakh contracts at the 59,000 call strike marks this level as a strong resistance zone. On the downside, the addition of nearly 9.09 lakh put contracts at the 58,000 strike reinforces this level as an important near-term support.

The Put–Call Ratio (PCR) has declined sharply to 0.59 from 0.73, signalling heightened caution and continued dominance of call writers.

Market Outlook

Nifty Bank has decisively engulfed the short-covering pullback of the previous two sessions and ended the week on a strongly bearish note. The formation of a weekly Marubozu candle, combined with a breakdown from a three-month-long consolidation phase, confirms that the index has entered a decisively bearish trend.

With every intraday recovery facing fresh selling pressure, sustained buying interest remains weak and inconsistent. Despite the possibility of occasional oversold bounces, the lack of follow-through buying keeps the overall outlook guarded.

The near-term trading levels are clearly defined:

• Resistance: 59,000–59,300
  
  
• Support: 58,000
  
  

The 58,000 level assumes heightened importance due to the convergence of technical and derivatives-based support. A decisive breakdown below this zone could open the door for a deeper correction toward 57,500. On the upside, any durable improvement in sentiment is likely only if the index sustains decisively above 59,000.

Until such confirmation emerges, sell-on-rise strategies are expected to remain dominant, and traders are advised to stay selective, disciplined, and cautious.