Nifty Bank Faces Directional Deadlock; Traders Await Breakout from Sideways Grind

The Nifty Bank index continues to tread water amid subdued sentiment, closing marginally higher by 50.90 points at 55,411.15. The market appeared largely indifferent to the RBI’s monetary policy announcement, suggesting that the status quo was already priced in. More significantly, Wednesday marked the twelfth straight session where the index closed below the previous day’s high — a telling sign of persistent selling pressure and bearish undertones.

Nifty Bank is holding just above the key 55,000 level but still can’t find a clear direction. Unless it closes strongly above 55,700, this back-and-forth trading is likely to continue.

Technical View: Harami Candle Offers a Glimmer, But Reversal Elusive

The daily chart shows a possible Bullish Harami candlestick pattern, which sometimes signals a reversal. But without higher trading volume or stronger price moves, this pattern is not convincing yet.

Key takeaways:

• No technical breakout is visible yet, with upticks attracting fresh selling, reinforcing the downward bias.
• The index is trading well below its short-term moving averages, like the 10-day (55,900) and 20-day (56,200) EMAs, which are now acting as resistance.
• Support is still strong between 55,000 and 55,100. If the index falls below this range, it could drop further to 54,500 or even 54,300.
• The Relative Strength Index (RSI) remains under 40, highlighting bearish momentum, and no bullish divergence is currently visible.

A meaningful reversal from here would require a volume-backed breakout, ideally led by institutional buying activity — which, so far, has remained absent.

Derivatives Snapshot: Writers Reinforce Bearish Grip

The derivatives landscape continues to mirror the bearish tone of the spot market:

• The 56,000 strike has emerged as a formidable resistance, with call OI swelling to 12.21 lakh contracts.
• On the other end, put writers are concentrated at the 55,000 strike, with 9.42 lakh contracts, but have begun shifting to lower strikes, signaling a retreat in bullish conviction.
• The Put-Call Ratio (PCR) has slipped from 0.77 to 0.72, reflecting increasing dominance of call writers and expectations of restricted upside.

Overall, the options chain data paints a picture of defensive positioning, with traders bracing for continued sideways-to-negative action unless a breakout upends the current structure.

Market Sentiment & Outlook: Bearish Bias Dominates

Even though there are some days with gains, the market’s overall setup is still weak:

• The index keeps closing lower and gets pushed back at resistance levels, which supports a sell-on-rise approach.
• There hasn’t been strong buying, especially from foreign investors, in either the cash or futures markets. This limits the chances of a big move up.
• Unless the index closes above 55,700 with good volume, a trend reversal is unlikely.

Key Technical Levels to Watch

Strategy for Traders: Stick with Sell-on-Rise

Until there’s a clear breakout or signs of buying, the market is more likely to move down. For now, traders should:

• Avoid aggressive long positions unless a move above 55,700 is confirmed.
• Use minor rallies toward resistance zones to initiate or add to short positions.
• Maintain strict stop-losses and stay nimble, as false breakouts are likely near round numbers like 55,000.

Bottom Line: Nifty Bank is stuck in a sideways trend, held back by negative sentiment and little interest from big investors. A move above 55,700 or below 55,000 will probably set the next direction. Until then, expect more rangebound trading with a slight downward bias.