Nifty Bank Slips Below Key Support Levels: Bearish Outlook Intensifies for Coming Week

The Nifty Bank index continued its downward trajectory this week, failing to reclaim the critical 57,000 mark for the third consecutive time. The consistent rejection at higher levels and a decisive breach below the recent trading range have clearly established a bearish structure for the index. The close below 56,800 has set the tone for further downside, especially as traders and institutions alike realign their positions amid growing uncertainty.

Breakdown Below Crucial Support Levels

After consolidating near the 56,800 zone, the Nifty Bank index saw a sharp breakdown, closing at 56,528.90 on Friday, marking a steep single-day fall of 537.15 points — the largest drop in the July series. This confirms a weakening trend as previous support zones have now turned into strong resistance.

The 20-day Exponential Moving Average (EMA), placed at 56,800, acted as a reliable support during earlier sessions. However, the index’s inability to hold this level has now flipped it into an immediate resistance zone. The structure now suggests that a continued slide below 56,500 could open the door for further declines toward the 56,100–56,000 zone.

Technical Indicators Point to Weakness

• RSI (Relative Strength Index) has remained below the 50-neutral level, reflecting weak momentum and a lack of buying interest.
  
  
• Multiple failed attempts to reclaim 57,000 reinforce bearish dominance in the current setup.
  
  
• Lower highs and lower lows over the past few weeks further validate the continuation of a downward trend.
  
  

Derivatives Snapshot: Bearish Sentiment Dominates

The derivatives data paints a clear picture of growing pessimism among market participants.

• Call Writing: The 57,000 Call strike saw a sharp surge in open interest, which now stands at 20.95 lakh contracts, confirming stiff resistance around this level.
  
  
• Put Support: The 56,000 Put strike has the highest open interest on the downside, at 12.58 lakh contracts, suggesting that this could serve as a temporary support in case of further decline.
  
  
• Put-Call Ratio (PCR): The PCR dropped from 0.75 to 0.67, indicating increased call writing and a clear bearish tilt.
  
  
• Max Pain: The Max Pain point has now shifted to 56,900, suggesting the market may consolidate near this level in the short term before choosing the next direction.
  
  

Market Outlook: Caution Ahead

With the Nifty Bank index trading below its 20-day EMA and struggling to reclaim its earlier support-turned-resistance zone of 56,800–57,000, sentiment remains fragile. Any rebound from current levels is likely to face selling pressure as traders use rallies to lighten positions.

Unless the index decisively reclaims the 57,000 level, the market is expected to stay under pressure, with more downside likely toward the 56,100–56,000 band. As we approach the expiry week, option data suggests a sideways-to-negative bias, with limited scope for aggressive upside.

Key Levels to Watch

Final Thoughts

The structural breakdown in Nifty Bank, combined with bearish derivative cues and weak momentum indicators, highlights the need for cautious positioning in the short term. A failure to hold above 56,500 could accelerate profit booking and lead to deeper correction in the days ahead. Traders are advised to remain vigilant and consider protective strategies while navigating the current volatility.