Nifty Bank pulls back after record high; key support seen at 56,100, upside target 57,900

After scaling a record high in the previous session, the Nifty Bank index witnessed profit-booking on Tuesday, June 10, slipping around half a percent in intra-day trading. The index touched a high of 57,015.4 earlier in the day before declining, marking a pause in its recent bullish momentum.

The fall followed a sharp rise spurred by the Reserve Bank of India's (RBI) aggressive 50 basis points rate cut announced last Friday, marking the third straight reduction in 2025. The central bank’s monetary easing measures—especially the unexpected cut in the cash reserve ratio (CRR)—have been widely seen as a major liquidity booster for the banking sector and broader economy.

RBI's Aggressive Measures Sparked Initial Rally

The RBI's six-member Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, voted 5:1 in favor of reducing the repo rate by 50 basis points to 5.5 percent. Additionally, the central bank cut the CRR by a full 100 basis points to 3 percent, releasing approximately ₹2.5 lakh crore into the banking system. This was the most significant CRR cut since March 27, 2020, when a similar measure was implemented to combat the economic fallout of the COVID-19 pandemic.

With this latest move, the RBI has slashed interest rates by 100 basis points in total this year, having initiated the easing cycle with a 25 basis point cut in February, followed by another in April. Importantly, the RBI has also shifted its policy stance from ‘accommodative’ to ‘neutral’, signalling that further decisions will be driven by incoming data.

The rate cut and liquidity infusion had prompted several banks to reduce their Marginal Cost of Funds based Lending Rate (MCLR), bolstering hopes of enhanced credit flow and driving banking stocks higher in recent sessions.

Technical Outlook: Bullish Momentum Intact

Despite Tuesday's mild pullback, the underlying technical structure of the Nifty Bank index remains strong. According to Om Mehra, Technical Research Analyst at Samco Securities, Nifty Bank's recent breakout from a month-long ascending triangle pattern is a key bullish signal. The index’s surge past the congestion zone suggests strong conviction among market participants.

The index continues to trade above key moving averages, with the daily Relative Strength Index (RSI) at 69 and the weekly RSI at 68—indicating strength without breaching overbought levels. Mehra also pointed out a bullish divergence on the RSI, lending further weight to the bullish trend.

Meanwhile, the Moving Average Convergence Divergence (MACD) has formed a fresh bullish crossover above the zero line, a technical pattern typically seen before extended uptrends. In sectoral performance, the Nifty Private Bank index has reclaimed the 28,150 mark, while the Nifty PSU Bank index is consolidating around 7,218—each contributing to the overall resilience in banking.

Key Levels to Watch

Holding above the breakout zone of 56,100–56,200 is critical for sustaining bullish momentum. A move beyond 57,120 could trigger a fresh rally towards the 57,700–57,900 zone, which aligns with the 0.618 Fibonacci projection level. However, a breach below the support zone could invite short-term mean reversion, offering new entry opportunities with a more favorable risk-reward ratio.

Overall, the Nifty Bank index may have slipped from record highs in today’s trade, but the broader outlook remains firmly positive. Backed by RBI’s aggressive monetary support, easing liquidity conditions, and favorable technical indicators, the banking space appears poised for further gains. Investors and traders will closely monitor key support and resistance levels, with the sector’s momentum likely to resume if macroeconomic cues and earnings trends remain supportive.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.