Nifty Bank index, which comprises 12 large capitalised public sector and private banks, witnessed selling pressure for the second straight session on Wednesday, in sync with the broader market. The index heavyweights such as State Bank of India (SBI), Bank of Baroda, HDFC Bank, and ICICI Bank were among the top losers. According to market experts, the lack of significant sectoral reforms as well as mixed earnings reports by private lenders dented investor sentiments.
As many as 10 out of 12 Nifty bank stocks were flashing in red, barring Federal Bank and AU Small Finance Bank. The index declined as much as 1.9% to touch an intraday low of 50,784. On the other hand, BSE benchmark Sensex declined 0.8% to touch a low of 79,750 during the session, while Nifty dropped 0.7% to hit a low of 24,307.
Shares of index heavyweights SBI, HDFC Bank, Bank of Baroda, and ICICI Bank fell up to 2%, while Axis Bank, IndusInd Bank, Kotak Mahindra Bank, IDFC First Bank also dropped up to 1%
“The banking sector has been experiencing underperformance, largely attributed to pressure on leading private banks following mixed earnings reports so far. Additionally, the absence of significant sector-related announcements in the Union Budget has dampened sentiment,” says Ajit Mishra- SVP, Research, Religare Broking.
“As a result, it has fallen below the short-term moving average support zone, specifically the 20-day exponential moving average (DEMA), intensifying negative market sentiment. Looking forward, support is anticipated around the 49,600-50,700 range, while a recovery may face resistance around the 52,000 level. Traders are advised to adjust their trading strategies accordingly,” he adds.
Technically, Bank Nifty has a witnessed a breakdown of its important psychological level of 52,000 and also trading below 20-DMA, says Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.
“It slipped below the support of the 51,150 mark, where 50,600 is an immediate support level. On the upside, 52,000 will now be an immediate hurdle, while 52,500 will be nexus obstacles. It may also remain sideways with a negative bias until it crosses the 52000 level,” explains Gour.
Echoing the same, Vishnu Kant Upadhyay, AVP, Research and Advisory at Master Capital Services, says that banking stocks declined following the bearish development on the chart. “RSI has been trading in the overbought zone since the beginning of July, indicating a corrective fall in the market. Additionally, daily chart analysis reveals that the Bank Nifty index closed below the key 21-day moving average, with the MACD showing a bearish divergence, signaling a downside trend. Index heavyweight stock HDFC Bank also saw prices fall from their recent swing high.”
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