Upside Capped, Downside Risk Builds as Nifty Bank Trades Near Support

The Nifty Bank index continues to struggle for direction, reflecting a lack of conviction among traders. After a flat opening on Monday, the index remained confined to a narrow intraday range and ended the session with a marginal dip of 10.10 points at 55,139.30. On the daily chart, a Doji candlestick was formed, highlighting the prevailing indecision and stiff resistance at higher levels.

The index is currently hovering just above its critical support at 55,000, a zone defined by the 100-day EMA and a previous swing low. With the broader trend tilting sideways-to-weak, every recovery attempt is likely to face selling pressure.

• Immediate resistance: 55,500–55,700
  
  
• Swing high resistance: 56,100 (key breakout level)
  
  
• Support zone: 55,000 (make-or-break level)
  
  

Unless the index convincingly clears 56,100, upside momentum will remain capped. On the downside, sustained trading below 55,000 could open the gates for further correction.

Derivatives Snapshot

The derivatives data paints a cautious picture:

• Call writers active at 55,500 strike (OI: 22.49 lakh contracts) — now a firm ceiling.
  
  
• Put OI concentration at 55,000 strike (14.37 lakh contracts) — acting as a crucial support base.
  
  
• Put unwinding & call additions suggest weak conviction in a breakout.
  
  
• PCR dipped from 0.52 to 0.50 — reinforcing call-side dominance and supply pressure.
  
  

While the oversold PCR leaves some room for a short-term relief bounce, the overall positioning signals restrained confidence in the upside.

Market Sentiment & Outlook

Nifty Bank remains range-bound between 55,000 (support) and 56,100 (resistance), pointing to limited upside and extended consolidation. Persistent call writing at higher levels, combined with unwinding at puts, reinforces this sideways bias.

• Above 56,100 → Upside momentum may revive.
  
  
• Below 55,000 → Downside risk increases significantly.
  
  
• Within range → Expect muted, choppy, and volatile sessions.
  
  

For now, a “sell on rise” strategy continues to be prudent. Traders should await a decisive breakout beyond 56,100 or breakdown below 55,000 for the next clear directional trend. With the tariff announcement on August 27 looming, volatility is likely to pick up, but broader consolidation remains the dominant theme.