The major reason for selling is perhaps the outflow by foreign investors who are some of the largest investors in Indian private banks. As long as foreign outflow continues, banks are not out of danger.
Technically, analysts believe the segment will continue to bleed in the short term. Thus, they advise to employ a strategy called put spread to take advantage of the moderately bearish views for the weekly contracts expiring on March 31.
“Traders could initiate this spread strategy to make modest returns with limited risk and reward. The spread suggested consists of buying one lot of 36,100 strike put option and simultaneously selling one lot of 35,600 strike put option,” said analysts at Axis Securities.
The brokerage house noted that compared to previous week, Bank Nifty has seen an increase in open interest of 15.98 per cent with decrease in price of 0.62 per cent indicating short build up, supporting the bearish view.
The high open interest concentration on the call side is seen at 36,500 strike followed by 37,000 which may act as immediate resistance, analysts said. The high open interest concentration on put side is seen at 35,500 strike followed by 36,000 which may act as immediate support.
Total Premium of A-T-M (at the money) option is at Rs 623 and probable trading range indicated for the day could be 35,000 to 37,000, Axis Securities noted.
Sachin Gupta, AVP – Research at Choice Broking also noted that Bank Nifty has support at 35000 levels while resistance at 36300 levels.
Meanwhile, Nifty has seen a decrease in open interest of 2.27 per cent with a decrease in price of 0.29 per cent indicating long unwinding. For the last five trading sessions, Nifty has been consolidating in the narrow range of 200 odd points.
The high open interest concentration on call side is seen at 17,300 strike followed by 17,400 and 17,500 which may act as immediate resistance. The high open interest concentration on the put side is seen at 17,000 strike followed by 17,200 and 17,300 which may act as immediate support.
Total Premium of A-T-M option is at Rs 203 and probable trading range indicated for the day could be 17,000 to 17,500, and 17,300 acting as a pivotal level, Axis Securities said.
