Bank Nifty index opened with a gap-down today at 45,561 versus yesterday’s close of 45,679. After marking a high of 45,727, the index has now declined to 45,460. Therefore, the index is down 0.5 per cent so far today.
The market breadth is neutral as half of the stocks in the index are in the green and the other half in the red.
Federal Bank, up by 1.3 per cent, is the top gainer whereas HDFC Bank, down by 1 per cent, is the top loser.
Within the banking sectors, Nifty PSU Bank index is up 0.4 per cent whereas Nifty Private Bank index has lost 0.25 per cent.
Bank Nifty futures
The August expiry futures of Bank Nifty opened the day slightly lower at 45,940 versus yesterday’s close of 45,986. It is currently trading around 45,700.
The price action in the hourly chart shows that the contract has confirmed a double top pattern whose neckline is at 45,900. The pattern hints at a further fall to 45,350. Support below this level is at 45,000.
On the other hand, if there is a recovery from the current level of 45,715, it may not extend beyond 45,900.
Trading strategy
Although the chance of a decline is high, the risk-reward ratio is not favourable at the moment. Therefore, traders can plan the entries in two legs as suggested below.
Short Bank Nifty futures are now at 45,700 and deploy the second leg of sell if the price rallies to 45,850. Place stop-loss at 46,100.
When the contract slips below 45,525, tighten the stop-loss to 45,700. Book profits at 45,350.
Supports: 45,350 and 45,000
Resistance: 45,900 and 46,100