astute bank: return to loss! How should you trade Bank Nifty now?

NEW DELHI: Nifty Bank was among the underperformers during the week, due to strong selling in private banks, including Kotak Mahindra Bank, HDFC Bank and ICICI Bank. Selling in the banking index intensified after some buying seen over the previous two weeks, giving investors hope that the worst may be over.

Perhaps the main reason for the sale is the flight of foreign investors who are among the biggest investors in Indian private banks. As long as foreign outflows continue, banks are not out of danger.

Technically, analysts believe the segment will continue to bleed in the near term. Thus, they advise employing a strategy called put spread to take advantage of moderately bearish views of weekly contracts expiring on March 31st.

“Traders could initiate this spread strategy to realize modest returns with limited risk and reward. The suggested spread is to buy a lot of 36,100 strike put options and simultaneously sell a lot of 35,600 strike options. exercise sell,” analysts at Axis Securities said.

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The brokerage noted that compared to the previous week, Bank Nifty saw an increase in open interest of 15.98% with a price drop of 0.62% indicating a short accumulation, supporting the bearish view. The high concentration of open interest on the calling side is seen at 36,500 strikes followed by 37,000 which could act as immediate resistance, analysts said. The high concentration of open interest on the put side is seen at 35,500 strikes followed by 36,000 which can serve as immediate support.

The total ATM (at the money) option premium is at Rs 623 and the likely trading range shown for the day could be 35,000-37,000, Axis Securities noted.

Sachin Gupta, AVP – Research at Choice Broking also noted that Bank Nifty has support at 35,000 levels while resistance at 36,300 levels.

Meanwhile, Nifty saw a decrease in open interest of 2.27% with a price drop of 0.29% indicating a long ending. Over the past five trading sessions, Nifty has consolidated within the tight 200 odd point range.

The high concentration of open interests on the calling side is seen at 17,300 strikes followed by 17,400 and 17,500 which can act as immediate resistance. The high concentration of open interest on the put side is seen at 17,000 strike followed by 17,200 and 17,300 which can serve as immediate support.

The total ATM option premium is at Rs 203 and the likely trading range shown for the day could be 17,000-17,500, with 17,300 acting as a pivot level, Axis Securities said.

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