Nifty Bank in Corrective Phase as Momentum Weakens and Derivatives Turn Cautious

Nifty Bank ended the session at 59,404.20, down 0.81%, as the index failed to sustain early strength and came under steady selling pressure during the latter half of the day. The daily chart formed a bearish candle, with prices retreating sharply from the intraday high of 59,993.50 to a low of 59,283.95, resulting in a weak close near the lower end of the day’s range. This price action reflects a clear rejection from higher levels, reinforcing the view that sellers remain active on intraday rallies.

Price Slips Below VWAP; Short-Term Momentum Turns Weak

On the daily chart, Nifty Bank has slipped below the VWAP placed near 59,550, indicating that the recent rebound attempt has lost momentum and is now facing resistance at higher levels. The inability to sustain above VWAP highlights waning buying interest and strengthens the short-term corrective bias.

However, on a broader trend basis, the structure remains relatively supportive. The daily Supertrend continues to hold near 58,860, suggesting that the medium-term trend remains intact as long as this level is defended on a closing basis. A sustained hold above the Supertrend keeps the broader setup constructive despite near-term weakness.

Momentum Indicators Signal Gradual Deterioration

Momentum indicators are steadily weakening. The daily RSI has slipped to 49, moving below the neutral zone and signaling a loss of bullish momentum. Meanwhile, the MACD remains in corrective territory, with the negative histogram continuing to expand—indicating that downside pressure is still building rather than stabilizing.

Sectoral performance further confirms the lack of leadership within the banking space. The PSU Bank index declined 1.31%, while the Private Bank index fell 0.96%, pointing to broad-based selling pressure across both public and private sector banks. This synchronized weakness limits the probability of a sharp near-term rebound in Nifty Bank.

Derivatives Market Signals Rising Caution

From a derivatives perspective, options data reinforces the cautious-to-negative undertone. On the Call side, the 60,000 strike has emerged as the strongest resistance, with the highest Call open interest of 18.75 lakh contracts, indicating aggressive Call writing near the psychological barrier. This positioning suggests that upside is likely to remain capped unless a decisive short-covering move unfolds.

On the Put side, the 59,000 strike has seen notable Put writing, with open interest of 9.93 lakh contracts, marking it as an immediate support zone. However, given the proximity of spot prices to this level, the support appears vulnerable, especially if selling pressure intensifies. The Put–Call Ratio (PCR) has dropped sharply to 0.78 from 0.99, clearly reflecting rising caution among traders and a shift toward defensive positioning.

Outlook: Key Levels to Watch

From a technical standpoint, the 59,300–59,250 zone now stands out as an immediate support band. A decisive breakdown below this range could accelerate selling pressure and expose the index to further downside toward 59,050, followed by the key Supertrend support near 58,860.

On the upside, 59,550–59,600 remains the first resistance area, while 59,800 stands out as a more significant hurdle. A sustained close above these levels would be required to stabilise the near-term tone and revive bullish momentum.

Conclusion

Until such confirmation emerges, Nifty Bank is likely to remain in a corrective phase, with sell-on-rise strategies and volatility-driven moves dominating in the near term. Traders are advised to stay cautious and closely track the Supertrend level and options positioning for cues on the next directional shift.