The Bank Nifty index opened today’s session with a gap-down at 45,060 versus yesterday’s close of 45,152. It has now recovered to 45,200, up by a marginal 0.1 per cent after the first hour of trade.
The advances/ declines ratio is positive at 10/2. Bandhan Bank is the top gainer, up by 2 per cent, whereas IndusInd Bank is the top loser, down by 1.4 per cent. The other stock that has depreciated is HDFC Bank, down by 0.6 per cent.
Public sector banks are doing well today, compared to private banks – the Nifty PSU Bank index is up by 0.7 per cent, while the Nifty Private Bank index is down by a marginal 0.1 per cent.
Bank Nifty futures
The July expiry futures of Bank Nifty opened the day lower at 45,190 versus yesterday’s close of 45,237. The contract is now hovering around 45,260.
The price action indicates that the contract is trading within 45,170 and 45,600. Ideally, the direction of a break of this range should give us cues about the next swing in price.
That said, currently, Nifty Bank futures is trading near the bottom of the range. So, the probability of a rally is high at this level. On the upside, it could rise to 45,600. A breach of this can lift it to 46,000.
On the other hand, if the contract falls below 45,170, we might see a corrective decline to 44,700, a support. Subsequent support is at 44,200.
Trading strategy
Although a trading range is in place, the risk-reward is now favourable to long positions as Nifty Bank futures is trading near the range bottom.
So, buy Nifty Bank futures at around 45,250, with stop-loss at 45,080. Exit at 45,500.
If the stop-loss of the above trade is hit, it means the support at 45,170 is breached. In such a case, initiate a short position with a stop-loss at 45,320. Exit this trade at 44,700.
Supports: 45,170 and 44,700
Resistance: 45,600 and 46,000