The Nifty Bank index closed lower on June 10, snapping its recent winning streak and forming a bearish candle on the daily chart—a technical signal that has traders and investors on alert for potential near-term weakness. After opening higher, the index faced profit booking and could not sustain its early gains, reflecting a shift in sentiment after several sessions of upward momentum.
Technical Picture: Bearish Candle and Key Indicators
The Nifty Bank index ended the day at 56,698.70, down 0.23% or 130 points. This decline was accompanied by the formation of a bearish candle, characterized by a lower high and a close near the session’s low. Such a pattern often indicates that sellers are regaining control, at least in the short term.
Technical indicators suggest the index is still in a broadly positive trend, with the 50-day simple moving average (SMA50) at 54,250.83 and the 200-day SMA at 51,702.98. The Relative Strength Index (RSI) remains elevated at 70.39, signaling the index is in overbought territory, which could lead to further profit booking or consolidation. Other momentum indicators like the MACD and Stochastic Oscillator also point to a market that may be due for a pause or minor correction.
Support and Resistance Levels
For the coming session, immediate support for Nifty Bank is seen in the 56,300–56,100 zone. A decisive break below this level could trigger additional selling pressure, with the next major support around 55,700. On the upside, resistance is now placed at 57,050—a level that, if breached and sustained, could trigger a short-covering rally towards 57,500.
Market participants are advised to watch these levels closely. Fresh long positions may be considered only if the index shows bullish price action near the support zone, while aggressive traders should maintain tight stop-losses to manage risk.
Broader Market Context
Despite the pullback in banking stocks, the broader market remains resilient. The India VIX, a measure of market volatility, dropped to 14.02—its lowest since early April—suggesting that overall investor sentiment remains positive. However, the appearance of a bearish candle in Nifty Bank, coupled with high RSI readings, signals a need for caution.
Recent Performance and Sector Movers
Nifty Bank has delivered strong returns in recent months, with a year-to-date gain of 11.48% and a 1-week return of 1.98%. Over the past three months, the index has surged 17.59%, underscoring the strength in banking stocks. On June 10, top gainers included Kotak Mahindra Bank, AU Small Finance Bank, Federal Bank, Axis Bank, and PNB, while ICICI Bank lagged.
Strategy for Traders
Given the current technical setup, traders should avoid chasing momentum and instead look for buying opportunities on dips near key support levels. If the index sustains above 57,050, a further rally could be on the cards. Conversely, a break below 56,100 may invite more selling.
