Bank Nifty Falls Nearly 2%, Slips Towards 54,500 as Banking Stocks Come Under Pressure

Banking stocks came under heavy selling pressure on Monday, September 28, pulling the Bank Nifty down nearly 2% as investors grappled with higher crude prices, rising bond yields and renewed concerns over interest rates. 

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

At 11:10 am, the index was down 1.9% at 54,536.65. 

The weakness stretched across public and private sector lenders. Yes Bank fell 4%, making it the biggest loser on the index at the time, while Union Bank of India dropped 3.4% and IDFC First Bank declined 2.7%. 

Among the larger lenders, HDFC Bank, State Bank of India and ICICI Bank were down nearly 2% each. All three were also among the leading losers on the Nifty. 

The pressure was visible across the two major banking segments. The PSU Bank index fell more than 2%, while the Nifty Private Bank index was down 1.5%. 

Oil, bond yields add to pressure on banks 

The sell-off unfolded against a difficult macro backdrop for the financial sector. 

Brent crude futures climbed 2.3% to around $106.7 a barrel after US President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz and end the fighting. Iran maintained on Sunday that diplomacy was the only way to resolve its conflict with the United States and Israel. 

The impasse renewed concerns over supplies moving through the Strait of Hormuz and kept oil prices elevated. 

India’s bond market was also under pressure. The benchmark 10-year government bond yield edged higher at the opening as the rupee weakened and Brent crude remained elevated. Investors were also awaiting the government’s borrowing calendar for the second half of the financial year. 

The rupee slipped 0.1% to 95.95 against the US dollar, although it avoided crossing the 96 level following central bank intervention. 

For banking and financial stocks, the combination of elevated bond yields, rising expectations of an RBI rate increase and possible pressure on net interest margins added to the cautious mood. 

Bank Nifty tests an important support area 

The slide brought Bank Nifty close to levels being closely watched on the technical charts. 

One assessment cited in the report placed an important support zone between 54,500 and 54,000. This area corresponds with the 80% retracement of the earlier advance from 52,784 to 58,706, along with the measured implication of the index’s recent consolidation. 

On the upside, 56,200 was identified as an immediate hurdle. A sustained recovery above that level would be needed before the recent corrective structure begins to ease, with 56,800-57,000 forming the next major resistance area. 

Another technical view placed support at 54,800-55,000 and indicated that a sustained move above the 56,400-57,000 region would be required to restore strength to the near-term setup. 

With the index hovering around 54,500 in late-morning trade, the session remained firmly tilted towards sellers, with losses spread across both state-owned and private-sector banks.