Indian stock market benchmark indices, Sensex and Nifty 50, were trading flat with a negative bias on Wednesday after witnessing a decent pullback rally in the previous two sessions. Bank Nifty today was down half a percent after a sharp 2% rally on Tuesday.
Bank Nifty traded around a critical level of 52,000, which analysts believe to be an important resistance level.
“Bank Nifty index made a strong move towards the critical resistance level at 52,000, a level that is essential for the weekly close to confirm sustained bullish momentum. The index must remain above the 52,000 resistance zone on a closing basis. A slip below 52,000, however, would indicate a shift towards bearish sentiment, prompting traders to exercise caution,” said Ganesh Dongre, Senior Manager of Technical Research at Anand Rathi.
According to him, the next key resistance points for Bank Nifty are in the 53,000 – 53,500 range, while important support is currently positioned at 50,500.
As the market is gearing up for the festive season, investors watch out for the trading strategies during the annual Diwali Muhurat Trading session, a one-hour event considered as an auspicious moment.
Ganesh Dongre has suggested a low-risk Bank Nifty options trading strategy for Muhurat trading session.
According to him, this Bank Nifty trading strategy works if the index remains above the crucial 52,000 level on a closing basis.
Here’s Muhurat Trading strategy for Bank Nifty options by Ganesh Dongre:
Bull Call Spread
Trade Structure:
> Buy 1 lot of the 30th Oct expiry 52400 CE at CMP 136
> Sell 1 lot of the 30th Oct expiry 52600 CE at CMP 81
Trade Rules:
The capital required in the trade is ₹20,000, This trade can be entered if Bank Nifty spot is trading above the levels of 52,000. The maximum profit in the trade is ₹2,190 and the maximum loss will be ₹810, Dongre said.
According to him, the break even point is above 52,450, above which start booking profit near to the resistance level of 53,000. The trade is protected with a limited risk of ₹810 per lot.
It is important to note that this Bank Nifty trading strategy is effective only if Bank Nifty remains above the 52,000 level on a closing basis.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
