How will Nifty Bank perform this week?

The global sentiment will play a huge factor in deciding the trend for this week.

Last week, Nifty Bank shredded about 918 points or 2.38%. On the technical chart, the index has formed a Doji candle with long upper and lower shadows, indicating indecisiveness. Despite the Doji candle, huge volatility and sudden sell-off has created a panic among the traders. Last Monday, the index witnessed a massive fall of 1608 points, followed by a superb short covering of about 1261 points on the following day. Thus, taking a total swing of about 2869 points. This makes the anticipation of the trend a bit trickier. Another point to add is that lately the index has been seen opening with a huge gap-up and gap-down, making it difficult for traders to deal with.

With monthly expiry coming up, traders must understand the index for next week and take positions accordingly. As per the technical analysis, last week’s low of 36651.85 happens to be the first line of defence, followed by 36578.95, which happens to be its 200-DMA. The level of 36375.35 happens to be a strong support level from which the index had previously made a superb rally of about 3050 points. With huge volatility expected next week the level of 36000 is an important psychological level. If breached, the index will see a free fall towards 35000 and below. In case of any upside, 38100 is the level for its 20-DMA and will act as the first resistance. Next in line is the last week’s high of about 38461.70. The next resistance is 39424.85, which is its recent swing high.

As per the F&O data, 39000 has the highest open interest on the call side, followed by 38000. On the put side, 37500 and 37000 have added huge open interest. However, as per the data, it looks as if the market participants have created straddles at these levels, as call options on these strikes have also added huge open interest. The PCR currently stands at 0.86, which is a bearish indication.

Global sentiment will play a huge factor in deciding the trend for this week. However, as per the data mentioned above, the index is expected to trade in a broad range of 39000 to 36000, with a negative bias. Huge volatility is expected during the week, and it is advisable to keep trading positions light until the clarity emerges.