Bank Nifty began today’s session with a gap-up at 52,794 versus yesterday’s close of 52,574. But then the index made a U-turn and fell sharply. It is now hovering around 52,280, down 0.5 per cent at the end of the first hour of trade.
The advance-decline ratio, at 2:10, gives the index a bearish bias. HDFC Bank and AU Small Finance Bank, up 0.8 and 0.5 per cent, respectively, are the only two gainers so far. On the other hand, ICICI Bank and Kotak Mahindra Bank, down 1.8 and 1.3 per cent, respectively, are the top losers.
As it stands, the private banks are facing higher selling pressure compared to their public sector peers. Therefore, Nifty Private Bank is down nearly 0.7 per cent whereas Nifty PSU Bank has lost 0.25 per cent.
Bank Nifty futures
Bank Nifty futures (July contract) opened today’s session higher at 52,850 versus yesterday’s close of 52,709. It is now hovering around 52,500, down nearly 0.4 per cent.
The price action shows that 52,400 has been a good support. However, there is still a chance for Bank Nifty futures to dip to 52,000 before starting its next upswing.
A rally, either from the current level or after a further moderation to 52,000, can lift Bank Nifty futures to 55,000 in the short term. Notable resistance levels are at 55,000 and 57,000.
However, if the contract breaks the support at 52,000, it can potentially be dragged down further to 51,000.
Trading strategy
Buy Bank Nifty futures if it softens to 52,000. Keep a stop-loss at 50,500. When the contract touches 54,000 after the trade is initiated, alter the stop-loss to 52,800. Book profits at 55,000.
Supports: 52,400 and 52,000
Resistance: 53,000 and 55,000