Bank Nifty began today’s session slightly lower at 48,124 versus yesterday’s close of 48,285. The index is now at 47,920, down 0.75 per cent.

The advance/decline ratio of this index stands at 4/8, a bearish sign. Bank of Baroda, up nearly 1 per cent, is the top gainer whereas HDFC Bank, down 1.4 per cent, is the top loser.

The public sector banks have substantially outperformed their private peers. As a result, Nifty PSU Bank has appreciated 0.6 per cent, but Nifty Private Bank has lost 0.9 per cent.

Broadly, the trend in Bank Nifty is bearish. But it is now hovering around a support. But the likelihood of a bullish reversal is low. The support can result in a minor corrective rally, which can attract fresh sellers at higher prices.

Bank Nifty futures

Bank Nifty futures (May contract) opened today’s session with a gap-down at 48,299 compared to yesterday’s close of 48,349. It has declined post the open and is now being quoted at 48,100.

The contract has found support at 48,000. On the back of this, the price might go up a bit before Bank Nifty futures see the next downswing. Such a potential up move can take it to 48,600, a resistance. Subsequent resistance is at 48,800.

On a breach of the support at 48,000, Bank Nifty futures can depreciate to 47,500 and then to 47,200, where the contract can find a trendline support. 47,000 is another support thus making the price band of 47,000-47,200 a good base.

Trading strategy

Stay on the side-lines for now. Go short with stop-loss at 49,000 if Bank Nifty rises to 48,600. When the contract slips below 48,000, revise the stop-loss to 48,500. Tighten the stop-loss further to 48,000 when the price falls to 47,500. Book profit at 47,200.

If Bank Nifty futures invalidates the support at 48,000 without a rally to 48,600, initiate fresh short with stop-loss at 48,500. Follow the stop-loss adjustments as recommended above.

Supports: 48,000 and 47,500

Resistances: 48,600 and 48,800

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