After shedding nearly 0.6 per cent yesterday, Bank Nifty commenced today’s trading session with a gap-up, opening at 44,265, as opposed to its prior day’s closing at 44,232. However, what began as a promising upward move took an abrupt U-turn, and the index is currently hovering around 44,040, marking a 0.4 per cent decrease for the day thus far.

The index’s bearish sentiment is substantiated by an advance/decline ratio of 1/11, pointing to stark market sentiment. ICICI Bank is the solitary exception, managing a modest gain of 0.15 per cent. Conversely, Bank of Baroda stands out as the day’s top loser, suffering a substantial 1.5 per cent decline.

Within the banking sector, the Nifty PSU Bank index has been the hardest hit, recording a significant 0.8 per cent drop by the end of the second trading hour. The Nifty Private Bank index also experienced a dip, albeit less severe, with a 0.4 per cent decline.

Bank Nifty futures

The August contract began the session slightly lower at 44,219, compared to the prior day’s close of 44,232. While it briefly reached a high of 44,388, the contract’s trajectory changed swiftly, and it currently hovers around 44,020.

Bank Nifty futures are now trading close to a critical support range between 43,870 and 44,000. A break below 43,870 could potentially trigger a descent to 43,500, although the likelihood of such a significant drop today appears remote. Conversely, if there’s a rebound, the contract may encounter resistance at 44,350, with further resistance at 44,500.

Trading strategy

Our recommendation is to exercise caution today and consider staying on the sidelines. However, traders with a higher risk tolerance can enter long positions in Bank Nifty futures, leveraging the support zone of 43,870-44,000.

A long entry at the current level of 44,020 is viable, with target set at 44,350 and stop-loss at 43,850. It’s important to note that this strategy carries an elevated level of risk, and prudent risk management is essential for those who choose to participate.