Bank Nifty began today’s session with a gap-down at 51,200 versus yesterday’s close of 51,473. The index depreciated more and is now at 50,920, down 1.1 per cent.
All 12 stocks in the index have lost, indicating a strong sell-off. Bandhan Bank and State Bank of India, down 3.4 and 2.8 per cent, are the top losers.
Nifty PSU Bank, down about 2 per cent, is the weakest sectoral index so far today. Nifty Private Bank has lost 0.9 per cent. So, overall, the public sector banks are facing higher selling pressure.
Bank Nifty futures
Bank Nifty futures (September contract) opened today’s session lower at 51,530 versus yesterday’s close of 51,728. It is now trading at 51,110, down 1.2 per cent.
The contract breached the support at 51,350 in the early trade today. From the current level of 51,110, Bank Nifty is likely to fall to 50,800, a support. Subsequent support is at 50,500.
In case there is a recovery, it will most probably be capped at 51,350. Resistance above 51,350 is at 51,550.
Trading strategy
For better risk-reward ratio, traders can short Bank Nifty futures if it moves up to 51,300. Place stop-loss at 51,420. When the contract falls below 51,000, revise the stop-loss to 51,200. Book profits at 50,800.
Supports: 50,800 and 50,500
Resistance: 51,350 and 51,550