Nifty PSU Banks index reverses after breakout

Nifty PSU Index turned positive on Tuesday giving up its losing streak after two consecutive days of fall. Index registered a marginal gain of 0.34 per cent.

Indian key benchmark indices gave up their winning streak and were off their record levels on August 10, where one of the key draggers remained the PSU Banking index. When Nifty fell 0.4 per cent, Nifty PSU Bank index nosedived 3.8 per cent. SBIN which forms 70.3 per cent of the index fell 4.1 per cent along with other draggers like Canara Bank, Bank of Baroda and Bank of India. The sentiments have continued till date with no signs of bounce back as of now.

Nifty PSU Bank formed a Bearish Engulfing on August 10 which was carried forward to both August 13 and 14 on intraday basis. The fall on August 10 was supported by reasonable volumes and 14-period RSI negative crossover from an over-bought zone.

Earlier, the index was trading in the range of 2,690 to 3,100 since March 2018. The index attempted breakout on June 13, 2018 but could not sustain and fell forming a Rounding pattern with a breakout on July 30.

Hence assuming the current fall to be a pullback, we hold 3,245, followed by 3,283 as resistances above 3,230 levels. However, in case the profit booking continues, we hold 3,067 followed by 2,978 as the supports if the index falls below 3,120 level.