Bank Nifty began today’s session slightly higher at 49,887 compared to yesterday’s close of 49,832. The index is now at 49,800.
State Bank of India is the best performing stock in the index by advancing 1.2 per cent whereas ICICI Bank, down 0.8 per cent, is the top loser. The breadth of the index stands at 6/6, thereby not showing an inclination.
Within banking, the public sector banks are broadly outperforming private sector peers. Hence, Nifty PSU Bank has gained nearly 0.2 per cent whereas Nifty Private Bank is down about 0.3 per cent.
Bank Nifty futures
Bank Nifty futures (August contract) opened today’s session marginally higher at 50,099 versus yesterday’s close of 50,052. It is now trading near 50,000, down by about 0.1 per cent.
The price action shows that Bank Nifty futures has been oscillating in the range of 49,850-50,800 since early last week. As the contract is now trading near the range bottom, the downside can be restricted.
If Bank Nifty futures bounce off the support at 49,850, it can rise and retest 50,800. But a breach of 49,850 can lead to another leg of downtrend and the contract could quickly fall to 48,000.
While the support at 49,850 can prevent a downside beyond that, a rally is not a given. So, traders need to wait for signs of bulls gaining traction. A move above 50,150 can be a positive sign.
Trading strategy
Buy Bank Nifty futures with a stop-loss at 49,800 if it rises above 50,150. Liquidate the longs at 50,800.
But if the contract slips below 49,850, traders can go short. Target and stop-loss can be 48,500 and 50,500, respectively. After initiating this trade, when the price declines to 49,000, tighten the stop-loss to 49,500.
Supports: 49,850 and 48,000
Resistance: 50,150 and 50,800