Bank Nifty began today’s session higher at 51,040 versus yesterday’s close of 50,986. But then, the index could not get a follow-through rally and moderated. It is now at 50,950, almost flat for the day so far.

There is a bearish indication shown by the advance/decline ratio of Bank Nifty, which currently stands at 1/11. ICICI Bank, up 0.4 per cent, is the only gainer. Bank of Baroda, down nearly 0.5 per cent, is the top loser.

While the banking stocks are broadly down, the public sector banks are facing relative higher downward pressure. Nifty PSU Bank has lost 0.25 per cent whereas Nifty Private Bank is down 0.1 per cent.

Bank Nifty futures

Bank Nifty futures (August contract) opened today’s session at 51,050 versus yesterday’s close of 51,037. It is now trading at 51,000, down 0.1 per cent.

The price action shows that, of late, Bank Nifty futures has been charting a narrow sideways trend. It has been moving within the 50,900-51,140 price band.

Therefore, technically, the direction of today’s trend can be predicted based on the direction of the break of the above-mentioned range.

A breakout of 51,140 can take 51,500 today whereas a clear breach of 50,900 can drag Bank Nifty futures to 50,550.

Trading strategy

Stay out until the range of 50,900-51,140 gets invalidated. After a break, traders can take position along the direction in which Bank Nifty futures move out of this price band.

Participants who initiated longs at 50,700 and 51,000 based on our recommendation in the last two days, can retain the position. But revise the stop-loss up from 50,700 to 50,890. Book profits at 51,500.

Square-off the trade towards the end of today’s session if neither target nor stop-loss is triggered.

Supports: 50,900 and 50,550

Resistances: 51,140 and 51,500

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