Nifty Bank Snaps Winning Streak, Tumbles Below 61,000

Introduction

The Nifty Bank index witnessed a sharp decline in trade on Thursday, February 19, ending a three-session gaining streak and falling below the crucial 61,000 mark. The downturn was fueled by widespread selling pressure across both private and public sector banks, reflecting a broader shift towards caution in the market.

Broad-Based Selling Hits Banking Sector

The banking index was down 562 points, or 0.91 percent, to 60,988.60 during the afternoon session. The negative sentiment was not confined to a few stocks but was evident across the sector. Kotak Mahindra Bank emerged as the top loser on the index, with its shares falling nearly 2 percent. Other heavyweights also faced significant pressure. Punjab National Bank (PNB), Axis Bank, and ICICI Bank all saw their shares drop by more than 1 percent each.

A wide range of other prominent banks, including IndusInd Bank, Canara Bank, Union Bank of India, IDFC First Bank, Yes Bank, Federal Bank, and HDFC Bank, registered declines of nearly 1 percent. Even typically resilient names like State Bank of India (SBI), Bank of Baroda, and AU Small Finance Bank were trading in the red, albeit with marginal losses. The weakness extended to related indices, with the Nifty Financial Services index falling 0.86 percent, while the PSU and Private Bank indices declined by 0.7 percent and 0.9 percent, respectively.

Key Technical Support Levels Breached

The session's decline was technically significant as the Nifty Bank index breached several immediate support levels identified by market analysts. Hitesh Tailor, a Research Analyst at Choice Equity Broking, had pointed to a support zone in the 61,250–61,350 range, which the index fell below decisively. Similarly, Rupak De, Senior Technical Analyst at LKP Securities, had noted support at 61,200, another level that was breached during the day's trade. This breakdown below established support zones suggests that bearish sentiment is gaining strength.

Analyst Perspectives on Market Outlook

Market experts highlighted key resistance and support zones to watch. Gaurav Udani, Founder of ThincRedBlu Securities, placed resistance at the 61,800–62,000 band, with support between 61,200 and 61,000. With the index trading below these support levels, the focus now shifts to whether it can stabilize or if further downside is likely.

Analysts suggest that the long-term uptrend remains structurally sound as long as the index holds above the 60,800–61,000 demand area. However, the short-term momentum has clearly shifted. The failure to sustain levels above 61,500 indicates profit-booking at higher levels.

Performance of Key Banking Stocks

Broader Market Context Signals Caution

The weakness in the banking sector is part of a larger narrative of market fatigue. The benchmark Nifty 50 index has also shown signs of losing steam, breaching its 50-day Simple Moving Average (SMA) and forming a bearish crossover between its 9-day and 20-day Exponential Moving Averages (EMAs). Such technical signals often precede a potential downtrend or a period of consolidation.

The Relative Strength Index (RSI) for the Nifty 50 has dipped below the neutral 50 mark, indicating weakening momentum. This broader market weakness provides a challenging backdrop for banking stocks, which are often a proxy for the health of the domestic economy.

A Challenging Start to the Year

This recent downturn adds to what has been a difficult start to the year for Indian equities. The market has seen significant wealth erosion, with BSE-listed companies losing approximately ₹20 lakh crore in market capitalization from their peak earlier in the year. This performance has positioned the Indian market among the weaker global performers in the current calendar year.

The decline in HDFC Bank is particularly notable, with the banking giant losing over ₹1 lakh crore in market capitalization during its worst week since January 2024, highlighting the scale of the impact on major constituents.

Conclusion

The fall in the Nifty Bank index below 61,000 marks a significant short-term reversal, breaking a winning streak and breaching key technical supports. The broad-based nature of the selling, coupled with weakening broader market indicators, has shifted the sentiment to cautious. Investors will now closely watch if the index can find support at lower levels or if this is the beginning of a deeper correction. The ability of the index to reclaim levels above 61,700 will be critical for the resumption of the uptrend.