Bank Nifty crashes over 1% as market sell-off deepens; ICICI Bank, Axis Bank drag index, technicals turn cautious

Bank Nifty

• Bank Nifty fell over 1 percent, led by losses in private-sector banks
• Sensex fell 1,000 points, Nifty dropped below 25,000 in market sell-off.
• US markets also declined sharply, adding to investor caution

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Bank Nifty extended its decline on Wednesday, January 21, slipping more than 1 percent in late-morning trade as selling pressure in heavyweight private lenders compounded a sharp market rout seen in the previous session. The banking index fell as much as 1.9 percent intraday, shedding over 1,100 points from its day’s high before paring some losses.

At around late morning, Bank Nifty was trading at 58,628.6, down 775.6 points, or 1.3 percent. The index touched an intraday low of 58,278.6 and is now about 3.6 percent below its all-time high of 60,437.35, highlighting the extent of the recent pullback.

Heavyweights lead the decline

The fall in Bank Nifty was driven largely by losses in key private-sector banks. ICICI Bank slid nearly 1.9 percent to Rs 1,350, emerging as the top drag on the index, followed by AU Small Finance Bank, IDFC First Bank, Axis Bank, and HDFC Bank, all of which were trading in the red. PSU banks also weakened, with PNB, Union Bank, and Canara Bank posting moderate losses.

Gains were scarce across the index. Yes Bank and Bank of Baroda were among the few stocks managing marginal upticks, though their advances were insufficient to offset broader weakness.

Broader market pressure persists

The decline in banking stocks mirrored weakness across the broader market. Benchmark indices extended Tuesday’s sharp sell-off amid weak global cues and heightened geopolitical concerns. By around 11 am, the Sensex was down over 1,000 points, while the Nifty slipped below the 25,000 mark.

Earlier, Tuesday’s fall had already pushed the Sensex and Nifty to their steepest single-day percentage decline in more than eight months, with both indices closing at their lowest levels in over three months. The continued pressure on Wednesday reinforced the risk-off mood.

Overnight weakness in US equities added to investor caution. The Nasdaq Composite plunged 2.39 percent, the S&P 500 fell 2.06 percent, and the Dow Jones Industrial Average declined 1.76 percent, marking the sharpest single-day fall since October. Ponmudi R, CEO of Enrich Money attributed the global sell-off to renewed trade-war concerns after US President Donald Trump escalated tariff threats against select European nations.

Foreign institutional investors continued to add to the pressure domestically. FIIs were net sellers of Indian equities worth Rs 2,938.33 crore on Tuesday, marking the 11th straight session of net outflows in January. FIIs have been net buyers only once this month, underscoring persistent risk aversion.

Geopolitical tensions also remained a key overhang. “There is risk-off sentiment in global markets now in response to Trump’s Greenland policy and threatened tariffs on European countries,” said V K Vijayakumar, Chief Investment Strategist at Geojit Investments. He added that investors have been moving towards safe-haven assets amid uncertainty over how the situation may evolve.

Technical outlook turns cautious

From a technical perspective, analysts flagged near-term vulnerability in Bank Nifty. According to Ponmudi R, the index opened with a gap-down near 59,100 and continues to underperform the broader market. Immediate support is seen around 59,060-59,000, near the 50-day exponential moving average. A decisive break below this level could drag the index towards the 58,800-58,700 zone, which has historically acted as a strong demand area. On the upside, resistance is placed at 59,500-59,700.

ICICI Direct said that the current weakness reflects profit booking after a sharp 1,400-point rally last week. While the broader structure remains intact, with the index still trading within a rising channel and above its 50-day EMA, failure to sustain above last week’s high of 60,235 could result in consolidation in the 58,900-60,200 range. Key support is seen at 58,500, a former resistance level now acting as support.

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