Mild Pullback Plays Out in Nifty and Nifty Bank

The Indian equity markets witnessed mild profit-booking on Wednesday, with both the Nifty 50 and Nifty Bank indices ending in the red, continuing the short-term consolidation phase. While the pullback might appear concerning at first glance, technical indicators suggest this is more of a healthy pause rather than the beginning of a deeper correction.

Nifty 50: Holding Steady Above Key Support Levels

The Nifty 50 closed at 25,405.30, down by 0.19%, marking the second consecutive session of losses. However, this mild dip is not yet triggering alarm bells. The formation of back-to-back red candles on the daily chart reflects short-term profit booking rather than structural weakness.

Key takeaways:

• The index continues to trade above its 9-day and 20-day EMAs, indicating that bullish undertones remain intact.
• The daily RSI has moderated to 59, suggesting consolidation within a neutral-to-bullish territory.
• The MACD remains in a positive crossover, which supports the ongoing bullish trend.
• On the hourly chart, although the momentum has turned sluggish, higher highs are still being maintained.

Key Levels to Watch:

• The index is hovering near the 23.6% Fibonacci retracement level at 25,380, which is acting as a short-term pivot.
• A deeper cushion lies around 24,200, which marks the 38.2% retracement, providing strong intermediate support.
• As long as 25,260 is protected on a closing basis, the outlook stays constructive.
• On the upside, a breakout above 25,580 could trigger fresh momentum toward 25,740 and 25,850.

Nifty Bank: Rising Wedge Faces Pressure

The Nifty Bank index ended the day at 56,791.95, down 0.36%, following a test of the upper boundary of its rising wedge pattern—a structure that often signals waning bullish momentum.

Adding to the pressure was broad-based weakness in banking stocks, with both Nifty Private Bank and Nifty PSU Bank indices declining, signaling a synchronized pullback in the sector.

Key insights:

• The index has broken below its 9-day EMA, indicating short-term vulnerability.
• However, it continues to hold above the 20-day EMA, offering a layer of technical support.
• The RSI has dipped below 60, indicating fading strength but not yet a breakdown.

Important Support and Resistance:

• Immediate support lies around 56,300–56,400, aligned with the 50% Fibonacci retracement of the recent upmove.
• A breakdown below this zone could lead to a more extended corrective phase.
• On the higher side, a decisive close above 57,200 will be essential to regain bullish momentum and aim for new highs.

Outlook: Buy-on-Dips Still in Play

Despite the pullback, the broader trend remains positive for both indices. This consolidation may present a buy-on-dips opportunity, especially if key support zones are maintained.

• For Nifty, watch for sustained closes above 25,580 to reinitiate upward targets.
• For Nifty Bank, consolidation above 56,000 can be a base-building phase, while 57,200+ remains the bullish trigger.

Conclusion:

Markets are in pause mode, not panic mode. With technical setups still largely intact and no major breakdowns visible yet, traders can remain cautiously optimistic, tightening stop losses and preparing for re-entry on strength.