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Bank Nifty (15,570.4): The long- and medium-term outlook remains positive for Bank Nifty. As long as the index rules above 13,250, there is no threat to its bullish outlook. However, in the short term, Bank Nifty may come under pressure. It has a key support at 14,065, which we expect the index to touch in the coming days. Failure to dip below 15,025 will take the Bank Nifty to new highs near 16,000 levels.
The index is in overbought zone. The proposed farm loan waiver by Andhra Pradesh and Seemandhra Governments may also impact bank stocks, especially PSU banks. Consumer Price Index inflation, due to be announced on June 12, will also be crucial.
F&O pointers : Despite a sharp surge on Friday, Bank Nifty futures shed over 3.5 per cent open positions as traders were not willing to roll over their positions expecting a correction. Option trading indicates a range of 15,500 and 15,000 for the index.
Strategies: Traders could consider the following strategies on Bank Nifty.
a) Shorting the Bank Nifty futures with a stop loss at 15,750 for an initial target of 14,065. Stop-loss can be shifted to 15,320 if Bank Nifty closes below that level. b) Consider buying 15,000 put, which closed at a premium of ₹82.1. This will entail an initial outgo of ₹2,100. While the maximum loss would be the premium paid, profits could be unlimited if Bank Nifty moves on expected lines. Traders could exit from the position if the premium hits ₹30.
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