The Bank Nifty index recovered from intraday lows and traded 0.35% higher at around 2 pm on Tuesday, snapping its four-day losing streak that had seen the index decline up to 1% to 53,121.85 earlier in the session. The recovery came as Brent crude prices slipped below the USD 95-a-barrel mark, trading 2% lower at USD 93.19 per barrel, providing relief to banking stocks that had been under pressure from elevated energy costs. Among the 14 constituents of the Bank Nifty, 10 were trading in the green, marking a significant turnaround from the previous session's broad-based weakness.
Brent crude prices declined to USD 93.19 per barrel, providing relief to the banking sector after the commodity had hovered around USD 94 per barrel amid stalled talks between the United States and Iran. Lower crude oil prices are seen as positive for India, which imports a significant portion of its oil requirements. A decline in crude prices helps reduce the country's import bill, eases pressure on inflation and supports economic activity, which, in turn, is viewed as favourable for banks as it can improve the overall operating environment and credit outlook. The sustained decline in crude prices has created a more conducive environment for the banking sector, with investors becoming more optimistic about lending prospects and profitability outlook.
AU Small Finance Bank emerged as the top gainer, rising more than 1%, leading the recovery in banking stocks. Shares of State Bank of India, Punjab National Bank, HDFC Bank and Kotak Mahindra Bank were up between 0.5% and 1%, contributing to the index's turnaround. The performance marked a significant shift from the previous session when Axis Bank emerged as the top loser, declining over 2%, while Yes Bank, ICICI Bank, State Bank of India, Punjab National Bank and AU Small Finance Bank fell between 1-2%. Among sectoral indices, the Nifty PSU Bank index had declined 0.68% and the Nifty Private Bank index had slipped 0.75% in earlier trading.
Technical analysts maintain their outlook with Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, identifying the immediate support for Bank Nifty in the 53,200-53,100 zone. Shah stated that "any sustainable move below this zone could result in Bank Nifty extending its weakness towards 52,700, followed by 52,300 in the short term." On the upside, the immediate resistance for Bank Nifty is placed in the 54,000-54,100 zone. The recovery from intraday lows suggests that the index is finding support at current levels, with the broader market sentiment remaining cautiously optimistic despite the recent volatility.
Despite the benchmark recovery, broader market sentiment remained positive with strong participation across segments. According to The Economic Times, out of 4,394 stocks that traded on BSE on May 27, 2,220 stocks witnessed advances, 1,996 saw declines while 178 stocks remained unchanged. The sentiment meter favours bulls, with the broader market breadth staying positive despite cuts in major indices. As per Bajaj Broking, the index is currently testing the upper end of the breakout zone, and sustaining above Monday's gap area of 23,835–23,922 would keep the near-term bias positive. On the downside, immediate support is placed around 23,600 levels, with the 23,200–23,000 region identified as a major support zone.
