Banking and financial stocks saw a sharp decline on Monday, dragging the Bank Nifty index down by over 2 per cent. The primary catalyst for the sell-off was the spike in elevated crude oil prices, which reignited market concerns regarding inflation and the possibility of tighter monetary policy measures.
The momentum shift saw the index face heavy selling pressure, with Public Sector Unit (PSU) banks leading the painful losses across the sector.
Weakness Sweeps Financial Sector as Indices Tank
The Nifty Bank index underperformed significantly against other benchmarks, falling approximately 2.35 per cent intraday. The index shed 1,556.55 points, hitting a low of 54,356.20. This severe drop made it one of the worst-performing sectoral indices during the trading session.The performance gap widened between the segments. The Nifty PSU Bank index registered a decline of 2.24 per cent, while the Nifty Private Bank index dropped 1.37 per cent.
Key Bank Stocks Under Pressure
The selling pressure was evident across both major segments. In the PSU banking space, several key stocks experienced significant drops, with Union Bank of India, Bank of India, Bank of Maharashtra, and Punjab National Bank all declining up to 4 per cent.Within the private banking group, notable laggards included State Bank of India, which declined up to 2.5 per cent. HDFC Bank fell up to 2.47 per cent, while IndusInd Bank saw a drop of 1.85 per cent.
Analyst View: Technical Levels for Banking Sector
Addressing the immediate volatility, Ajit Mishra, SVP, Research at Religare Broking Ltd, noted that the banking index had recently participated in a substantial uptrend, having earlier gained around 8.5 per cent, supported by strength from both private and PSU banks.Moving forward, Mishra provided specific technical guidance. He suggested the index may retest its long-term moving average (200 DEMA) located near 56,700. Following this retest, the next potential move is toward the 57,800 level.
On the downside, the short-term moving average (20 DEMA) is expected to provide the initial support at 54,300. Should the market break this level, the subsequent support zone is anticipated near 53,000.
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