Bank Nifty opened gap-down but closed at day`s high, showing strength - ICICI Direct
Nifty : 24596
Technical Outlook
Day that was…
* The Indian equity benchmark closed on a positive note and settled the weekly expiry session at 24,596, up 0.09%. The Nifty Midcap and Small cap indices snapped two sessions of underperformance, and closed on a positive note up 0.33% to 0.17% respectively. Sectorally, barring Oil & Gas and Realty all indices closed in green, where, IT, Pharma, and PSU Bank outperformed.
Technical Outlook:
* Post gap down opening index witnessed supportive efforts in the vicinity of gap zone (24379-24164) which helped index staged a strong rebound swinging 290 points and recovered smartly from day’s low as a result it made a bull candle with long lower wick and closed above 100-day EMA as it held firm over the past nine sessions, indicating buying demand at lower levels.
* Key point to highlight is that despite all the volatility Nifty has managed to hold above 24,500 signaling strong support. In the current scenario, the past five weeks' corrective move (-4%) has hauled weekly stochastic oscillators in oversold conditions (placed at 9), hence a decisive close above the previous sessions high will be the prerequisite for gradual recovery towards 25000 in the coming weeks. Any further development related to tariff negotiation’s outcome would dictate the further course of action. Traders should note that, since Covid lows, the index has not closed on a negative note for more than 5 consecutive weeks and subsequently witnessed a technical pullback. Hence, traders should refrain from creating aggressive short positions at the current juncture.
* On the broader market front, the midcap index is currently trading in the vicinity of 100-day EMA and Small cap is trading in the vicinity of 200-day EMA with stochastics trading in the oversold zone, indicating impending pullback. Hence, one should keep stock centric approach while focusing on stocks backed by strong earnings.
* On the structural front, we are in a secular bull market, wherein intermediate corrections due to Global as well as domestic uncertainties have offered incremental buying opportunities from a medium-term perspective. Hence, we advise investors not to panic in current tariff led volatility, instead capitalize current corrective phase to build quality portfolio backed by strong earnings in a staggered manner.
* Key monitorable to watch out for in current volatile scenario:
a) Development of Bilateral trade deal negotiations.
b) U.S. Dollar index has pulled back and likely to retest past 2 years breakdown area of 100.50. Failure to sustain above it would result in resumption of the down trend.
c) India VIX: after 11 weeks India VIX is likely to close above previous week high. Further, bounce back from the cyclical low of 10 suggests a rise in volatility going ahead.
* We maintain our support at 24200 which is 200-day EMA.
Nifty Bank : 55521
Technical Outlook
Day that was...
* The index closed on a positive note amid tariff related volatility and settled at 55521, up 0.20%, Meanwhile, the Nifty Pvt Bank index mirrored the benchmark, ending on a positive note at 26901, up 0.19%
Technical Outlook:
* Bank nifty despite a gap-down open attributed to adverse tariff news, Index demonstrated resilience by finding support near its 100-day EMA and subsequently closed at the day's high, indicating underlying bullish strength amidst market uncertainties. The daily price action formed a strong bullish candle with lower wicks, indicating buying demand emerged from the lower levels, pointing to potential upward momentum.
* Key point to highlight is that bank nifty ended its twelve-day losing streak, coinciding with a sharp bullish reversal on the stochastic oscillator from oversold territory. Looking ahead, sustained buying momentum above the previous day's high could signal further upside, potentially driving a pullback towards the 56,800-57,300-resistance zone in coming weeks. A decisive breakout above this range would likely trigger the next leg of the upward move
* Since April, intermediate corrections have remained shallow while the index has consistently held above its 100-day EMA. Moreover, over the past eleven weeks, the index has retraced 50% of the preceding 8.50% up move seen in the prior five weeks. The slower pace of retracement highlights a robust price structure, which augurs well for the next leg of the uptrend. However, any extended correction from current levels could find immediate support near the 54750 zone which is 50% retracement level of its preceding rally and confluence with 100-day EMA base support.
* The PSU Bank Index mirrored the benchmark and closed on a positive note, forming a bull candle and closed near the previous session high. The index staged a strong rebound after supportive buying emerged from the 100day-EMA which has been held firm since May 2025 despite tariff related volatility, wherein it also continues to trade above the 200-day EMA along with 50% retracement of the preceding rally (from 6065 to 7305), both placed near 6685 offering a meaningful downside cushion, a key support that had held since May. While the Bank Nifty consolidates within 3.5% of its all-time high, PSU Banks continue to lag, trading 16% below their peak, thereby presenting a possible catch-up opportunity. Despite the ongoing weakness, the index maintains a higher-high, higher-low structure as per Dow Theory since its breakout on May 19, with immediate support seen around 6,700, which aligns with the 20- week EMA
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