Bank Nifty bearish, check where it is headed after 500-point fall

Nifty was trading at 19,769.45 and BSE Sensex dipped 75 points to 65,907.46

Banking stocks were under pressure on November 17, dragged down by HDFC Bank, ICICI Bank, IDFC First Bank, and RBL Bank among others, a day after the Reserve Bank of India (RBI) tightened norms for personal loans and credit cards.

In the morning, all banking indices were flashing red. The Bank Nifty was down over a percent, the Nifty PSU bank sank 2.6 percent and Nifty private bank and Nifty financial services tumbled 1.3 percent each.

The market sentiment turned negative after top banking and non-banking finance names including Bajaj Finance, HDFC Bank, ICICI Bank, Axis Bank, RBL Bank and SBI Card crashed up to 10 percent as RBI raised capital requirements to check the unbridled growth in the unsecured loan segment.

IDBI Bank Limited slumped 3.66 percent after the DIPAM secretary said that stake sale may not be completed this year, as some of the RBI's mandatory approvals were pending.

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“Bank Nifty is under pressure today after the RBI unexpectedly introduced measures to tame the rapid growth in unsecured loans over the past few years,” said Avdhut Bagkar, Derivatives & Technical Analyst at StoxBox.

The central bank increased the risk weights on unsecured credit (personal loans, consumer durable loans and credit cards) of banks and loans to NBFCs.

“The 100-simple moving average (SMA) situated at 44,510 should present a key hurdle for the ongoing upward rally. Unless this is taken out, the trend could take a pause. Only by overpowering the 100-SMA could the bias recoup positivity towards reaching the 46,000 level,” Bagkar added.

On the downside, he expects support at 43,500–43,600 and said a slip below 43,000 could alter the optimistic bias.

"The Nifty Bank looks bearish on the daily charts with strong resistance at 44,200. A daily close below support of 44,000 could lead to a target of 43,525 in the near term," said AR Ramachandran, Co-Founder and Trainer, Tips2trade.

Also Read: RBL Bank, SBI Card tank up to 10%, hit hardest by RBI's revised personal-loan norms

Prashanth Tapse, Sr VP (Research), Mehta Equities Ltd sees Bank Nifty's intraday support near 43,600, a breach of which could take the index towards 43,250. Bank Nifty’s 200-DMA is placed at 43,268.

“Bank Nifty is likely to face resistance at the 44,251 mark and then hurdles are placed at 44,801. A close above 44,000 levels will be a trend changer on a weekly basis,” Tapse said.

The equity benchmarks the Nifty and the Sensex remained flat. At 11.20 am, the Nifty was trading at 19,769.45, up 4 points, while the Sensex was down 75 points at 65,907.46.

State Bank of India (SBI), Bajaj Finance, Axis Bank, ONGC and Coal India were the top Nifty losers, while SBI Life Insurance, HDFC Life, Asian Paints, Apollo Hospitals and Hero Motocorp were the gainers.

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