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Bank Nifty began today’s session on a weak note — it opened at 47,976 versus yesterday’s close of 48,021. It is now hovering around 47,840, down 0.4 per cent at the end of the first hour of trade.
Contrastingly, the advance-decline ratio, at 7:5, gives the index a positive touch. Constituents with higher weightage in the index, like HDFC Bank and ICICI Bank are down, weighing on Bank Nifty.
Bandhan Bank, up 2.2 per cent, is the best performer in the index whereas ICICI Bank, down 1 per cent, is the top loser.
Broadly, public sector banks and private sector banks have diverged in performance so far today — Nifty PSU Bank has advanced 0.3 per cent, while Nifty Private Bank has lost nearly 0.4 per cent.
Notably, Bank Nifty has been in a bear trend of late, and we expect it to decline further, which can drag the futures contract as well.
Bank Nifty futures
Bank Nifty futures (May contract), unlike its underlying index, opened today’s session higher at 48,235 compared to yesterday’s close of 48,176. However, sellers pushed the contract lower immediately after the opening.
Currently, Bank Nifty futures is trading around 48,000, a potential support. Given the current momentum, this support is likely to be breached. Thecontract can then quickly drop to 47,500 and to 47,200.
On the other hand, if Bank Nifty futures bounce off the support at 48,000, it will face resistance at 48,200. A breakout of this can lift the contract to 48,600, a resistance. Subsequent resistance is at 48,800.
Trading strategy
Stay on the sidelines for now. Go short with stop-loss at 48,250 if Bank Nifty slips below the support at 48,000. Book profits at 47,500.
Supports: 48,000 and 47,500
Resistance: 48,200 and 48,600
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