Nifty Bank Analysis: No Trend Reversal Yet, Caution Warranted as Support Gets Tested

On Thursday, the Nifty Bank index saw sharp swings during the monthly expiry session. Even with weakness in the broader market and low sentiment, the index held close to its key support levels. This shows that buyers are still active near the lower end, but upward movement remains limited.

Technical Overview

The index tried to recover during the day but was pushed back near 56,500, creating a clear bearish signal. This level is now a strong resistance area, supported by the alignment of important moving averages at 10, 20, and 50 days.

As of Thursday's close, the Nifty Bank index dropped 188.75 points to finish at 55,961.95. The index continues to trade in a crucial inflection zone between 55,700 and 55,500. This range has historically acted as a base, and any breakdown below it could significantly tilt the bias toward the bears. Until this support zone cracks, buyers may continue to defend the territory.

Volatility & Price Structure

The session was highly volatile and showed a period of consolidation. A clear move outside this range will likely set the next short-term trend. Since there is no strong breakout or breakdown, the market remains uncertain. Bulls and bears are both active, but neither side is in control yet.

Momentum Indicators

The Relative Strength Index (RSI) continues to hover around 40, reflecting weak bullish strength and lack of any confirmed trend reversal. This reading also indicates that momentum is still lacking, making it difficult to call for a sustained upside at this stage.

Derivatives Snapshot

The F&O data suggests a neutral to slightly bearish bias:

• Call writing is aggressive at the 56,500 strike, where OI has climbed to 4.61 lakh contracts.
• Put writing is highest at 56,000 strike with 7.46 lakh contracts, suggesting support here.
• Put writing is slowly increasing at lower strikes, which suggests some support is forming. However, strong call writing is keeping the index within a narrow range.
• The Put-Call Ratio (PCR) stands at 0.90, signaling selective interest at lower levels but also underscoring supply at the top.

Market Sentiment & Outlook

The index is still moving sideways, with no clear sign of a trend change. Buyers are active near the lower end, but resistance is stopping any breakout. The index needs to move above 56,500 to show real bullish strength.

On the downside, a breach below 55,500 could trigger fresh selling and open the gates for lower levels. Until then, the price action is likely to remain range-bound. FPIs increasing their short positions adds further overhead pressure. Also, the fact that the index is trading below its 50-DEMA adds to the bearish undertone.

Strategy for Traders

Given the current scenario:

• Bullish Bias: Only above 56,500 with strong volume confirmation.
• Bearish Bias: If 55,500 is breached decisively.
• Neutral/Balanced View: As long as the index remains between 55,500 and 56,500.

Traders should be cautious and avoid taking big risks. It is better to wait for a clear breakout or breakdown before making strong moves. With high volatility and little follow-through, short-term trades should use tight stop-losses and clear targets.

Conclusion

The Nifty Bank index is at an important point. Support is strong near 55,500 and resistance is at 56,500, so the index is stuck between these levels. Until one side breaks, the market will likely stay uncertain and choppy. Traders will need patience and discipline during this time