Nifty Bank Rebounds from Key Support; PSU Banks Lead the Charge

The Nifty Bank index delivered a sharp rebound from the psychological 55,000 mark on Monday, with PSU banks spearheading the rally — a clear sign that bulls are still defending their turf.

Despite Friday’s steep sell-off, the index refused to extend losses, instead forming a bullish harami pattern near its demand zone and key moving averages. The session absorbed recent selling pressure and closed decisively above immediate resistance, restoring trader confidence.

📈 Closing Stats:

• Nifty Bank: +505.85 points, ending at 55,510.05
  
  
• For the third straight session, intraday dips turned into bear traps, as buyers stepped in aggressively near the lows.
  
  

With the 54,900–54,800 zone now acting as a strong base, price behaviour points toward a sideways-to-bullish bias. Unless the index sustains below 54,800, an advance toward 56,000 remains on the table.

Technical View

• False Breakdown Trap: Friday’s late short-sellers were caught off guard as the index staged a quick reversal from below 55,000 to close well above 55,500.
  
  
• Support Anchors: The 100-DEMA and prior support zone continue to hold firm, forming a reliable base.
  
  
• Crucial Range: Monday’s trade stayed within Friday’s high of 55,652 and low of 54,905 — levels that will guide the next breakout.
  
  
• Near-term Resistance: Sustained close above 10-DEMA at 55,654 could trigger short covering.
  
  
• Downside Risk: Break below 54,800 may extend losses to 54,400.
  
  
• Momentum: Daily RSI remains near 40, with no confirmed reversal yet.
  
  

Strategy: Range-bound setup favours a “buy-on-dips” approach within the 54,800–55,600 band until a decisive breakout.

Derivatives Snapshot

• Resistance Zone:
  
  
  • 56,000 Call: Heavy call writing with OI at 13.11 lakh contracts — key hurdle.
    
    
• Support Zone:
  
  
  • 55,000 Put: Highest put OI at 9.88 lakh contracts — immediate support.
    
    
• Position Shifts:
  
  
  • Put writers cutting exposure and rolling to lower strikes.
    
    
  • Call writers increasing positions near current levels — suggesting guarded sentiment.
    
    
• PCR: Slightly higher at 0.75 (from 0.72) — still indicating call-side dominance.
  
  

Market Sentiment & Outlook

With PSU bank stocks showing fresh strength and the index holding the 100-DEMA, sideways consolidation remains the dominant theme.

• Bullish Trigger: Breakout above 55,600 could open the path to 56,000+.
  
  
• Bearish Trigger: Breakdown below 54,800 could bring 54,400 into play.
  
  
• Pattern Watch: Bullish harami on the daily chart hints at reversal potential, but confirmation is key.
  
  

FPI Positioning: Foreign Portfolio Investors have raised net short futures to over 94%, reflecting persistent caution despite oversold conditions.

Bottom Line: Until a breakout occurs, a range trading strategy remains prudent — with volatility likely to rise as the index trades at this critical inflection point.