PSU banks drag markets down by tanking 3 per cent

Indian stock markets retreated after three consecutive upticks on Tuesday, all thanks to the PSU banks. Nifty PSU Bank index plunged more than 3 per cent after six straight upbeats, dragging the entire market downwards. A pullback after a breakout or a total turnback is just a matter of time.

Bank of India which holds 2 per cent weightage in the index was the top loser with 5 per cent and more losses. Union Bank and Bank of Baroda which hold 2.6 and 10.2 per cent were also among the top losers shedding more than 3 per cent each. PSU Bank major SBI too lost 2.5 per cent dragging the entire sector down. All others traded in the red.

Technically, PSU Bank index had witnessed a downward sloping trendline breakout at 2,945 on May 25. The index surged for a day near its 100-day EMA level and retreated on Tuesday as if for a pullback. The index has retreated up to the trendline level of 2,930. If it takes support at the trendline and bounces back, we hold 3,015-3,055 followed by 3,085-3,100 as the resistances. However, if the pullback continues in the form of profit booking, we hold 2,900-2,850 as immediate support, followed by 2,800 per share.