Bank Nifty January Futures (48,755)

Bank Nifty index opened with a wide gap-down but has managed to bounce back and recover some of the loss. The index is fell to a low of 48,116 in the initial trades and has risen back from there. It is currently trading at 48,496, down 0.5 per cent. The advances/declines ratio is at 3:9. This is a bearish signal.

Bank Nifty outlook

The broader trend is down. So, the recent bounce could just be a correction within the broad downtrend. Intraday resistance is at 48,650 which can be tested now. If the index manages to breach 48,650 a further rise to 49,000 is possible.

But a reversal from around 48,650 will indicate the resumption of the downtrend. That in turn can drag the index down to 48,000.

So, the price action around 48,650 will need a close watch during the day.

Bank Nifty Futures

The Bank Nifty January Futures (48,755) is down 0.25 per cent. Immediate resistance is in the 48,870-48,900 region. A reversal from this resistance zone can drag the Bank Nifty January Futures contract lower to 48,200-48,150 in the coming sessions.

In case the contract manages to breach 48,900, then an extended rise to 49,200-49,300 is possible.

Trade Strategy

We expect the upside to be capped at 48,900. So, wait for a rise and go short at 48,840 and 48,880. Keep the stop-loss at 48,930. Trail the stop-loss down to 48,820 as soon contract falls to 48,760. Move the stop-loss further down to 48,710 when the contract touches 48,670. Exit the short positions at 48,600.

Supports: 48,250, 48,150

Resistances: 48,900, 49,300