Bank Nifty, which depreciated 3.1 per cent last week, seems to carry over the bearish sentiment this week, too. Today’s session opened with a gap-down at 47,390 versus Friday’s close of 47,421. 

The banking index fell further after opening and is now hovering around 47,090, down 0.7 per cent by the end of the first hour of today’s session. Substantiating the downward inclination, all 12 stocks in the index are down. Punjab National Bank, down 2.7 per cent, is the top loser.

The public sector banks are leading the decline. Nifty PSU Bank is down 2.5 per cent whereas Nifty Private Bank is down 0.6 per cent.

The chart of Bank Nifty shows that it has now slipped below key trendline support, so the probability of this index seeing more decline today is high.

Bank Nifty futures

Bank Nifty futures (May contract) began today’s session relatively flat at 47,600, as against Friday’s close of 47,607. However, as the underlying index is weak, the contract saw a sharp downswing. It is now trading around 47,250, down 0.7 per cent.

From the current level, 47,200 is the nearest potential support. However, given the current momentum with which Bank Nifty futures is falling and that the trend has been bearish recently, this level is likely to be breached. In such a case, the decline can extend to 46,500.

On the other hand, if Bank Nifty futures recover from support at 47,200, they will face a barrier at 47,500. Subsequent resistance is at 47,800. Nevertheless, even if there is a rally from the current level, it is likely to be capped at 47,500.

Trading strategy

Since Bank Nifty futures may inch up to 47,400 from the current level of 47,250, traders can initiate fresh intraday shorts when the contract touches 47,400. The target and stop-loss can be 47,800 and 46,600, respectively.

Supports: 47,200 and 46,500

Resistance: 47,500 and 47,800

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