Bank Nifty opened with a huge gap-up today at 50,890 versus last week’s close of 48,984. After marking a high of 50,990, the index is now trading around 50,550, up 3.2 per cent so far today.
All 12 stocks in the index have gained today led by Bank of Baroda, up 9 per cent, followed by State Bank of India, up 6.5 per cent.
Comparatively, public sector banks have rallied well so far today. Nifty PSU Bank has advanced 6.5 per cent whereas Nifty Private Bank has gained 2.6 per cent.
Although Bank Nifty is in a bull trend and that it has seen a fresh breakout, an above average intraday rally today and increased volatility means more risk for traders.
Bank Nifty futures
Bank Nifty futures (June contract) opened today’s session higher at 50,606 as against the previous close of 49,352. It then registered a record high of 51,000 before moderating to the current level of 50,700. Thus, so far today, the contract has gained 2.7 per cent.
As it stands, Bank Nifty futures has surpassed the resistance at 50,000, which is a positive sign. However, the sharp rise in the early trade means the probability for the rally to extend further has diminished. In fact, there might be a moderation in price because of traders taking some money off the table.
That said, technically, a breakout of 51,000 can possibly lead to an up move to 51,500. But if Bank Nifty futures decline it can find support at 50,400. Subsequent support is at 50,000. A fall below 50,000 today is unlikely.
Trading strategy
Taking intraday trades on either side carries higher risk. So, we recommend traders to stay away.
Nevertheless, traders with high risk appetite can buy Bank Nifty futures with stop-loss at 50,200 if the price softens to 50,500. Exit at 51,000.
Supports: 50,400 and 50,000
Resistance: 51,000 and 51,500