Bank Nifty: 28425-28350 zone likely to act as crucial support

The banking benchmark index Bank Nifty started the week with a minor downtick and, thereafter, the index remained sideways for a major part of the trading session. However, in the last hour of trading session, the bears came out with all guns blazing and Bank Nifty ended below the crucial 28700 mark. The price action formed a sizeable bearish candle. All the constituents of Bank Nifty index ended in the red, with IDFC First Bank plummeting the most by 12.61 per cent, followed by Punjab National Bank, which dived 7.36 per cent.

Going ahead, the zone of 28425-28350 is likely to act as crucial support for the index as it is the confluence of horizontal trendline support and 100-day exponential moving average. In the coming session, holding above this support level would keep the pullback options open. While on the upside, 50-day EMA is likely to act as immediate resistance, which is currently placed at 29136, followed by 29450 level. The 14-period RSI is currently quoting at 38.24 and it is trading below its 9-day average. The stochastic is trading in the oversold zone since last four trading sessions and a minor positive divergence is clearly visible between daily stochastic and index price movement.

The derivatives data suggest that among Bank Nifty Calls, the 29,300 strike price is the most active Call for May 16, 2019 weekly expiry. Among the Bank Nifty Puts, 28,500 strike price is the most active Put for May 16, 2019 weekly expiry. For May 16, 2019 weekly series, the maximum open interest (OI) outstanding for Calls were at 29,500 strike price and for the Puts, it were at 28,500 strike price.