Bank Nifty opened today’s session marginally higher at 51,849 versus yesterday’s close of 51,801. But as the index faced considerable selling pressure, it started to depreciate and is now at 51,300, losing 1 per cent so far today.

Except State Bank of India, up 0.3 per cent, all other stocks in the index are in the red. Bank of Baroda and Axis Bank, down 1.7 and 1.6 per cent, are the top losers.

Nifty Private Bank has lost 1.1 per cent so far today whereas Nifty PSU Bank is down 0.7 per cent. Thus, broadly, private banks seem to be facing higher downward pressure.

Bank Nifty futures

Bank Nifty futures (October contract) opened today’s session at 52,100 versus yesterday’s close of 52,043. It is now trading at 51,480, down 1 per cent.

The chart shows that the contract has fallen off the barrier at 52,200. Note that the price region between 52,000 and 52,200 is a resistance band.

From the current level, the nearest support is at 51,000 with the next one at 50,500. As the price action denotes good selling pressure, Bank Nifty futures is likely to slip to 50,500 soon.

On the other hand, if there is a recovery from the current level, the contract should break out of 52,200 to establish a sustainable rally. In such a case, it can rise to 52,800 and 53,000.

Nevertheless, as it stands, Bank Nifty futures appear to fall to 50,500.

Trading strategy

Short Bank Nifty futures now at 51,480 and on a rally to 51,800. Place stop-loss at 52,200.

When the contract falls to 51,000 revise the stop-loss to 51,500. Tighten the stop-loss further to 51,100 when the price falls to 50,700. Exit at 50,500.

Consider holding this trade for the next few sessions.

Supports: 51,000 and 50,500

Resistances: 52,000 and 52,200

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