Bank Nifty began today’s session with a gap-up at 50,581 versus yesterday’s close of 50,364. The index is currently hovering around 50,730, up 0.7 per cent at the end of the first hour of trade.
11 out of 12 stocks in the index are in the green, a bullish signal. Federal Bank and Punjab National Bank, up 3.6 per cent and 2.6 per cent respectively, are the top gainers. ICICI Bank, down by a marginal 0.1 per cent, is the only loser.
Nifty PSU Bank has advanced 1.2 per cent whereas Nifty Private Bank has gained 0.7 per cent. So, broadly, the public sector banks are doing comparatively better than the private sector peers.
Bank Nifty futures
Bank Nifty futures (November contract) opened today’s session higher at 50,556 versus last week’s close of 50,430. It is now trading at 50,850, up 0.8 per cent.
The price action so far today is showing positive signs. However, the contract has a strong barrier at 51,000. Bank Nifty futures should decisively breach this level to build a sustainable rally.
If the contract breaks out of 51,000, it can rise to 52,000 quickly.
In case the contract resumes the fall from the current level or after a rise to 51,000, it can fall to 49,500. Note that 50,000 is a potential support.
Trading strategy
Yesterday, we suggested initiating short position at 50,400 and 50,800. Traders who have gone for this trade will now be holding shorts at an average price of 50,600. Retain this trade. Maintain a stop-loss at 51,300.
Going ahead, when the contract drops to 50,000, trail the stop-loss to 51,200. Exit the shorts at 49,500.
Fresh shorts can also be initiated now. Refer above for target and stop-loss.
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 51,300