Nifty Bank Holds 56,000: Bulls Push Back, But Resistance Ahead

The Nifty Bank index witnessed a strong intraday reversal today after briefly dipping near its key support at 56,000. Backed by buying in major banking names like HDFC Bank and ICICI Bank, the index managed to bounce back and end the day on a firm note. The recovery not only confirmed the importance of the 56,000 level but also highlighted the bulls’ continued resilience at lower levels.

Technical Setup: Bounce from Critical Support

From a technical standpoint, the index formed a Pinbar candlestick on the daily chart—a common sign of reversal—right near the 56,000 mark. This zone has become a battleground for bulls and bears, with put writers adding significant positions around this level. As a result, it’s emerging as a strong support base.

Nifty Bank closed with a gain of 669.75 points at 56,952.75, just a notch below the psychological barrier of 57,000. What’s more encouraging is that the index reclaimed both its 10-day and 20-day EMAs, which are now acting as immediate supports near 56,800. These developments lend strength to the short-term outlook, although a breakout above 57,250–57,350 is still needed for the bulls to take full charge.

What Does the RSI Tell Us?

The Relative Strength Index (RSI) is hovering near the 50 mark—neither overbought nor oversold. This suggests a neutral bias and aligns with the rangebound structure we’re currently witnessing. For now, neither bulls nor bears are dominating, but the undertone leans slightly positive given the technical recovery.

Derivatives: Positioning Points to Tug of War

The options market shows clear signs of indecision. On the call side, the 57,000 strike has the highest open interest (17.33 lakh contracts), acting as a near-term resistance. Meanwhile, put writers have aggressively built positions at the 56,000 level, with open interest standing at 19.59 lakh contracts—reaffirming this zone as a strong base.

The Put-Call Ratio (PCR) has improved to 0.83 from 0.72, reflecting growing put writing. However, it’s still below 1, suggesting that the market hasn't fully entered bullish territory yet. The Max Pain level has moved up to 56,800, indicating that options traders expect expiry around this range—yet another sign of consolidation.

FPI Activity & Short-Covering Prospects

Foreign Portfolio Investors (FPIs) have not shown any significant change in sentiment. Their futures positions continue to reflect a bearish stance, with minimal long additions. However, the long-short ratio has now slipped into oversold territory. This means that if the 56,000 support holds firm over the next few sessions, we could witness short-covering, which might propel the index higher in the near term.

Outlook: What to Watch Going Forward

The sharp rebound from 56,000 and the reclaiming of moving averages suggest that bulls are not ready to give up yet. However, the index remains stuck below a crucial supply zone of 57,250–57,350. Unless there is a clear breakout above this range, traders should expect more consolidation.

A move above 57,350 could open the gates for a fresh rally, while a break below 56,000 might invite fresh selling. Until then, the index is likely to oscillate within this range. For directional cues, investors should closely monitor FPI positioning and options data.