Where is Nifty Bank headed after HDFC Bank drags it down by 1,050-point?

The ripples of the fall were seen in other banking stocks especially after their own quarterly numbers were also released.

A decline of more than 3 percent in the prominent banking entity HDFC Bank, coupled with the divestment in other banking shares, pulled Nifty Bank beneath a crucial support level, opening the door for potential further downward movement. Every constituent of the banking index, with the exception of ICICI Bank, experienced negative trends today, as financial results from lending institutions inundated the market.

Nifty Bank witnessed a decrease of approximately 1,043 points, equivalent to a 2.26 percent decline, settling at 45,015 points. At a certain juncture throughout the day, the index registered a drop of over 1,200 points.

“After undergoing four days of lateral consolidation, the index breached its recent swing low of 45,500 support. The forthcoming week’s supports for the index are 44,800 and 44,000. Meanwhile, a resistance is manifesting around 46,000,” remarked Akshay Bhagwat, Senior VP of Derivative Research at JM Financial.

He further indicated that in anticipation of the monthly expiry in January, there is a noticeable shift in Open Interest (OI) with Call (CE) selling transitioning from 47,000 to 46,000, indicating the accumulation of resistance in the range of 46,000-46,200. Put writers adjusted their OI support base to lower strikes at 44,000, given the intensification of selling pressure in the day trading session.

During afternoon trading, HDFC Bank experienced a dip exceeding 3 percent at Rs 1,430, extending the losses observed in the previous week. The stock has witnessed a decline of over 15 percent in the past seven days. Investors offloaded HDFC Bank shares following the revelation of strain on margins, sluggish deposit growth, and a decade-low earnings per share (EPS) in its financial results for the December quarter.

Author: Shabaz pasha