Bank Nifty opened this week with a gap-down after a relief rally on Friday. The index opened at 42,721.40 today versus Friday’s close of 42,782. It is now hovering around 42,650, down 0.3 per cent.

The bearish bias is supported by the breadth of the Bank Nifty – the advance/decline ratio stands at 4/8. HDFC Bank, up 0.5 per cent is the top gainer whereas AU Small Finance Bank, down 7.4 per cent has been the bears’ favourite so far today.

Broadly, the public sector banks appear weaker than their private peers. Nifty PSU Bank is down 0.6 per cent whereas Nifty Private Bank index has lost  0.4 per cent.

That said, like the overall market today, the banking sector too is facing considerable selling pressure. So, Bank Nifty and Bank Nifty futures will most likely extend their losses today.

Bank Nifty futures

Bank Nifty futures (November expiry) opened today’s session lower at 42,994.35 as against last week’s close of 43,043.40. It is now trading at 42,915, down 0.3 per cent.

The contract has a strong barrier at 43,080. Above this, the next resistance is at 43,350. Until 43,350 holds true, the bearish bias will remain. 

On the other hand, there is support at 42,680, which has been preventing a fall below this since today morning. Subsequent support is at 42,430. A break below this level means the contract would have formed lower low. This can lead to another leg of quick downswing.

Support below 42,430 is at 42,200.

Trading strategy

Since the overall trend is bearish, traders can consider short positions. 

Sell Bank Nifty futures at the current level of 42,915; add more shorts when the price moves up to 43,000. Place stop-loss at 43,200.

When the contract falls below 42,680, tighten the stop-loss to 42,800. Exit the shorts at 42,450.

Supports: 42,680 and 42,430

Resistance: 43,080 and 43,350

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