Bank Nifty index is trading down but has recovered sharply from its intraday low. The index opened with a wide gap-down at 50,456. And has risen back sharply from there. It is currently trading at 50,776, down 0.22 per cent. The advances/declines ratio is at 8:4. This trend has to continue for the index to sustain the bounce for the rest of the day.
Bank Nifty outlook
Although the bounce from the low today has given some relief, the broader trend continues to remain down. Important resistance is at 51,000. The Bank Nifty index has to surpass this hurdle to turn the sentiment positive. Only then a rise to 51,500-52,000 will be possible.
Failure to breach 51,000 and a turn-around from there will keep the downtrend intact. If that happens, the Bank Nifty index can fall back to 50,500 and even extend the fall to 50,000.
Bank Nifty Futures
The Bank Nifty July Futures (50,765) are bouncing back from the support at 50,600. But resistances are at 50,800 and 51,000. The contract has to break above 51,000 decisively to gain momentum and rise further. Only then the contract can rise to 51,200 and 51,400.
As long as the contract trades below 51,000, the downtrend will remain intact. It will also keep the contract vulnerable to break 50,600 and fall to 50,200.
Trade Strategy
Traders can go short on a break below 50,600. Keep the stop-loss at 50,680. Trail the stop-loss down to 50,560 when the contract moves down to 50,520. Move the stop-loss further down to 50,480 when the contract touches 50,440 on the downside. Exit the shorts at 50,400.
Supports: 50,600, 50,400
Resistances: 51,000, 52,000