Technical View: Nifty near 21,700 post RBI policy; strong support around 21,500-21,400

Nifty50 index fell 1 percent on February 8 after Reserve Bank of India (RBI), as expected, kept the key benchmark rates unchanged in its policy decision.

The Nifty started the session above 22,000 but soon erased all the gains and fell dip in red, as the rate-setting Monetary Policy Commmittee kept the repo rate unchanged at 6.5 percent for the sixth consecutive time and also maintained the stance unchanged at withdrawal of accommodation.

"Post RBI policy, markets have witnessed profit booking particularly in private sector banking. However, we don’t expect a major selloff and this correction can be used as a buying opportunity. On lower side, Nifty will find strong support around 21500-21400 levels and dips towards these levels can be used to initiate fresh long positions," said Aditya Agarwal, Head Derivatives & Technicals at Sanctum Wealth.

"From current levels in short term, upside will be limited and range of 22000-22200 will continue to act as stiff supply zone for index. Selected large Cap PSU banks and real estate stock looks positive and will be our preferred pick at this juncture," he added.

Bank Nifty

The Nifty Bank index failed to hold on the opening gains and ended 1.7 percent lower at 45,012. After opening at 45,973.85, the index made a high of 46,181.20, but RBI’s status quo policy failed to boost the sentiment and dragged the index nearly 1,300 points, from the day's high.

“The Bank Nifty index experienced a robust comeback by bears, encountering substantial selling pressure following the RBI policy announcement. The critical support zone of 45500 has been breached and is now expected to act as a resistance level,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

“Pullbacks towards this mentioned resistance are considered opportune levels for selling. The subsequent support is positioned at 44400, and a break below this level is likely to intensify selling pressure, potentially leading the index towards the 44000 mark,” he added.

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