How will Bank Nifty perform this week?

 Looking at the current scenario and global cues, any strong upside has a lesser possibility.

Bank Nifty index had closed at 38517.25 last week. The index fell about 272 points or 0.7% on weekly basis. However, the index made some volatile moves which made it difficult to trade. The index hit a low of 37319.05 and recovered about 1200 points from there. With the week’s high at 39197.20, it formed a Doji candle with shadows on either side, highlighting elevated volatility. This shows a lack of trend and next week, we can expect similar moves with huge volatility.

On the daily chart, the index is still above its 20-DMA, and it looks much stronger than Nifty. However, the index closed below the previous day’s high, which is a weak sign. With the help of technical analysis, we find that the 20-DMA which is at 38225 will act as the first line of defence, followed by the zone of 37800-38000 which includes 100-DMA support. Moreover, the prior swing low of 37319 will hold strong support for the index and any fall below it will trigger a free fall. In case there is any upside, the prior swing high of 39200 shall act as the first target, which is followed by 39500 and 40000. However, looking at the current scenario and global cues, any strong upside has a lesser possibility.

Analyzing the Futures & Options data, 40000 holds the highest open interest in the call side. Next in line is the 39000 call strike. The maximum put option stands at 38500 followed by 38000. The PCR is at 0.79 which hints towards bearish sentiment among the market participants. Moreover, 38500 short straddles have been created on Friday. However, this is subject to change with the global and local sentiments. As compared to the put options, the call options have been aggressively written, and along with this, puts have been covered which pretty much summarizes the bearish picture.

Thus, the index is expected to trade with a slightly negative bias as indicated by the technical and F&O data.

Also read: Has Nifty Realty lost its charm?