Bank Nifty began today’s session with a gap-up at 50,312 versus last week’s close of 50,180. The index is currently hovering around 50,350, up 0.35 per cent at the end of the first hour of trade.

The advance/decline ratio of the index stands at 7/5. IDFC First Bank, up 1.8 per cent, is the top gainer whereas Bank of Baroda, down 1.4 per cent, is the top loser.

Nifty PSU Bank is down 0.3 per cent whereas Nifty Private Bank is up by a marginal 0.1 per cent. So, it is the public sector banks that are weaker today so far.

Bank Nifty futures

Bank Nifty futures (November contract) opened today’s session flat at 50,300 versus last week’s close of  50,297. It is now trading at 50,400, up 0.25 per cent.

The contract is attempting for a recovery. But the bulls only have a limited space ahead. Because the trend has been bearish recently and last week, it slipped below the key support at 51,000. Henceforth this level can act as a strong barrier.

We expect Bank Nifty futures to resume the downtrend at the current level of 50,400 or after seeing a minor rally to 50,800.

Once the bears up the game again, Bank Nifty futures (November) is expected to decline to 49,500 over the next few sessions.

Although less likely, if the contract breaks out of 51,000, the outlook can turn positive wherein it can rally to 51,700 and then potentially to 52,750.

However, given the prevailing chart set up, the probability of a fall stands high.

Trading strategy

Short Bank Nifty futures now at 50,400 and add more shorts if it rises to 50,800. Place initial stop-loss at 51,500. When the contract drops to 49,800, trail the stop-loss to 51,200. Exit the shorts at 49,500.

Consider carrying over the above trade to the next few sessions unless either target or stop-loss is triggered.

Supports: 50,000 and 49,500

Resistance: 51,000 and 51,700

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