Bank Nifty still looks weak on charts; PSU Bank index range-bound

According to Ravi Nathani, an independent technical analyst, the Nifty Bank index is expected to face stiff resistance in the 48,500 - 48,900 range.

Nifty Bank Index

The Nifty Bank Index, currently trading at 47,970.45, is exhibiting a range-bound behavior in the absolute near term, with the suggested range identified between 48,300 and 47,600. A breakout above or below this range could signal the next directional move for traders to consider.

In the event of the index trading above 48,300, traders should anticipate stiff resistance levels around 48,500 and 48,900. Conversely, if the index trades below 47,600, it could find support around 47,100 and 46,600. These support and resistance levels provide important reference points for traders to gauge potential price movements.

Technical indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are signaling bearish sentiment on the charts. This suggests that selling pressure may persist in the near term, potentially leading to underperformance in both the index and its constituent stocks.

Given the bearish indications from the technical indicators, traders may consider adopting a cautious approach. Conservative traders may opt to wait for a breakout confirmation before initiating positions, while more aggressive traders could explore short-selling opportunities, especially on rallies, with a keen eye on risk management strategies.

As always, traders are advised to remain vigilant, adapt their strategies to evolving market conditions, and adhere to prudent risk management practices to navigate the dynamic landscape of the financial markets.

Nifty PSU Bank Index

The Nifty PSU Bank Index, currently trading at 7,150.00, appears to be exhibiting a range-bound pattern on the charts. The identified range spans from 7,250 to 7,136, with a breakout above or below this range likely to signal the next directional move for traders to consider.

Technical indicators, including near-term moving averages and the Moving Average Convergence Divergence (MACD), are indicating signs of underperformance. With the MACD potentially drifting into negative territory, there is a suggestion of bearish sentiment prevailing in the market.

In light of these indications, a prudent trading strategy would involve considering short-selling opportunities on rallies. Traders may look to sell on rises within the identified range, with a strict stop-loss order placed at 7,310 on a closing basis to manage risks effectively.

Should the index break below the lower boundary of the range at 7,136, traders may anticipate further downside momentum, with potential support levels identified around 7,050, 7,000, and 6,850. These levels could serve as targets for short-selling positions or as reference points for adjusting trading strategies.

As always, traders should exercise caution, conduct thorough analysis, and implement sound risk management practices to navigate the market dynamics successfully. Adapting to changing market conditions and remaining disciplined in execution are key principles for achieving trading success.

(Ravi Nathani is an independent technical analyst. Views expressed are personal).