Bank Nifty crashes nearly 2%, trades near 54,500; check top losers: What lies ahead?

As per the latest business developments, Bank Nifty crashed nearly 2% on September 28 due to various reasons, including rising crude prices.

At 11:10 am on September 28, the sectoral index was trading 1.9% softer at 54,536.65 and the losses on the index were led by Yes Bank, Union Bank of India and IDFC First Bank, which declined 4%, 3.4% and 2.7%, respectively.

HDFC Bank, State Bank of India and ICICI Bank were down nearly 2% each and were among top Nifty losers.

Elevated bond yields, rising RBI interest-rate gain chances and NIM compression are likely creating overhang in BFSI space and stock specific overhangs stay for larger banks as well.

US President Donald Trump stated he rejected an Iranian proposal to reopen the Strait of Hormuz and end fighting, while Iran insisted on Sunday that only diplomacy can solve its conflict with the United States and Israel.

The deadlock boosted concerns over oil supplies through the key shipping route, pushing Brent crude futures up 2.3% to around $106.7 a barrel.

"Elevated crude prices, rising inflation and lack of adequate liquidity stay cause of major concerns for domestic markets," G Chokkalingam, founder and head of research at Equinomics Research stated, adding "the short-term outlook for Indian markets stay quite pessimistic."

"Key backing is placed at 54,500–54,000 zone being the confluence of the 80% retracement of the previous major up move from 52,784 to 58,706 and measuring implication of the recent consolidation range.

"For a meaningful improvement in the trend structure, Bank Nifty needs to establish a sustained Elevated High–Elevated Low formation and reclaim the immediate hurdle at 56,200. A sustained move above this level can signal a pause in the correction and open the upside towards the major resistance zone of 56,800–57,000," stated Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking.

"Going ahead, the index is likely to stay in a sideways to bearish phase unless it manages to reclaim the immediate resistance zone. Holding the 54,800–55,000 backing area would be important to prevent further deterioration, while a sustained move above 56,400–57,000 would be required to bring resilience back into the near-term setup," stated Choice Broking.