Nifty Bank Consolidates With Strength, Breakout Watch Above 61,000

Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities

Market Recap

Nifty Bank index has been displaying unusual price behaviour, marked by sharp gap-up openings followed by range-bound trade within the first hour's price band. Despite the absence of strong directional momentum, the index has convincingly protected its crucial support area, with the gap zone continuing to act as an immediate cushion.

The index closed higher by 548.80 points at 60,669.35, reinforcing the prevailing buy-on-dips strategy.

This ability to absorb supply at lower levels has gradually shifted the near-term bias in favour of the bulls. A firm base is taking shape in the 60,200-60,000 region, which aligns with the consolidation breakout neckline and continues to serve as the bulls' primary line of defence. Notably, even while trading close to its major resistance zone of 61,000-60,800, the index has managed to hold its gap support. A sustained move above this resistance band could signal follow-through buying. The current price behaviour underscores the strength of the underlying support and improves the likelihood of a near-term upside move.

Structurally, the index continues to form higher lows and is trading above its key moving averages, reflecting sustained accumulation on declines. A decisive breakout above the immediate hurdle at 61,000 could trigger short covering and invite fresh buying interest. However, holding above the 60,000-60,200 support zone remains critical to maintaining a durable bullish structure.

Monday's session reflected a clear sideways undertone. After the initial gap-up opening, the index held on to its gains and successfully defended its support zone, highlighting active buying interest at lower levels. The evolving base formation and continuation in price structure suggest that bulls are gradually regaining control.

Technical View

From a technical standpoint, the index appears to be in a continuation phase. The price structure indicates gradually improving bullish momentum, with corrective declines being consistently bought into. This steady improvement in price behaviour adds credibility to the ongoing buy-on-dips approach. A sustained move above the 61,000 mark could inject fresh momentum into the ongoing firm trend.

Importantly, the 60,300-60,000 zone-earlier a strong supply area-has now transformed into a key demand pocket. This region also coincides with the 0.38 Fibonacci retracement level and key moving averages, creating a strong confluence and a crucial inflection point for the index.

Momentum indicators further support this constructive setup, with the Relative Strength Index (RSI) closing near 60, signalling a gradual strengthening of bullish momentum. A clean breakout above 61,000 could accelerate buying interest, while any corrective dips toward the 60,300-60,000 region are likely to be viewed as accumulation opportunities.

Derivatives Snapshot

Derivatives data points to an improving and optimistic undertone. Put writers have added aggressive positions at out-of-the-money strikes, effectively cushioning the near-term downside. Simultaneously, call writers appear to be shifting their positions to higher strikes, indicating expectations of a range-bound market with a positive bias. A notable open interest build-up of around 7.01 lakh contracts at the 61,000 call strike highlights this level as a key resistance. On the downside, the addition of nearly 20.02 lakh put contracts at the 60,000 strike reinforces its importance as a strong immediate support. The Put-Call Ratio (PCR) has stabilised near 1.01, reflecting sustained optimism and the continued dominance of put writers.

Market Outlook

Nifty Bank index is showing signs of bullish stabilisation by sustaining firmly above its short-term moving averages and building a solid base in the 60,300-60,200 zone. Despite the wide gap-up openings, the index has managed to hold its ground, with intraday declines being swiftly absorbed, indicating renewed buying interest from lower levels. A sustained follow-through above the 61,000 mark could pave the way for a sharper short-covering rally. On the downside, any pullback toward the 60,300-60,200 band is expected to attract strong buying interest and support accumulation. As long as these support levels remain intact, the buy-on-dips strategy is likely to remain favourable. Traders are advised to stay selective, disciplined, and cautious while navigating the evolving market structure.

Source : Equity Bulls

Keywords

NiftyBank BANKEX SAMCOSecurities NSE