Bank Nifty began today’s session with a gap-up at 50,684 compared to Friday’s close of 50,517. The index has now fallen 50,420, down 0.2 per cent after the first hour of today’s trade.
The breadth of the index shows that 8 out of 12 stocks are down, giving a bearish bias. Bank of Baroda, up 1.9 per cent, is the top gainer. At the other end of the spectrum, Axis Bank, down 0.9 per cent, is the top loser.
The public sector banks are broadly doing well so far today. Thus, Nifty PSU Bank, up about 2 per cent, is one of the top sector index. Whereas Nifty Private Bank has lost 0.3 per cent.
Bank Nifty futures
Bank Nifty futures (August contract) opened today’s session higher at 50,706 versus last week’s close of 50,624. But then, it declined and is currently hovering around 50,500, down 0.2 per cent.
The chart shows that Bank Nifty futures has fallen off the upper boundary of the range at 51,000. Only a decisive break out of this level can turn the outlook positive for the contract. In such a case, it can rally to 53,400.
But if the bears gain traction, the contract will most likely fall and retest the lower boundary of the range at 4,850. Note that Bank Nifty futures has been oscillating between 49,850 and 51,000 since early August.
Trading strategy
On the back of the resistance, traders can consider going short on Bank Nifty futures at 50,500 with a stop-loss at 50,900. When the contract touches 50,200, revise the stop-loss to 50,500. Book profits at 50,000.
Note that the risk-reward ratio is not very attractive for the above recommended trade plan. So, risk averse traders can refrain from trading.
Supports: 50,000 and 49,850
Resistance: 51,000 and 53,400