Bank Nifty index opened today’s session slightly lower at 43,598 versus yesterday’s close of 43,634. The index has fallen further and is now trading at 43,415. Note that it is now trading near a key support at 43,400, which is also the lower end of the range within which the index has been trading for a little over a month. The top of the range is 44,500.
So, ideally, the direction of the break of the 43,400-44,500 range will most likely decide the next leg of trend.
The advance/decline ratio of Bank Nifty now stands at 3/8, giving the index a bearish bias. Bank of Baroda is the top gainer, up by 0.6 per cent whereas IndusInd Bank, down by nearly 1 per cent, is the top loser.
Both Nifty PSU Bank index (down 0.25 per cent) and Nifty Private Bank index (down 0.5 per cent) have declined.
Bank Nifty futures
The June expiry futures of Bank Nifty opened the day with a gap-down at 43,750 versus yesterday’s close of 43,788. The contract is now hovering around 43,535.
Thus, Bank Nifty futures is now testing a critical support at 43,500. If this level is breached, we are likely to see a quick fall to 43,300 or even 43,000.
On the other hand, if the contract bounces off the support at 43,500 it could face a hurdle at 43,760. Subsequent resistance is at 44,000.
Trading strategy
Although the overall bias is bearish, the Bank Nifty futures is now trading near a key support of 43,500, where the 50-day moving average coincides.
Therefore, stay on the fence and initiate fresh short positions if the contract decisively breaches the support at 43,500. Target and stop-loss for this can be 43,000 and 43,760, respectively.
Supports: 43,300 and 43,000
Resistance: 43,760 and 44,000