Banknifty (BNF) was strong today than Nifty and much of the fall of Nifty was arrested since BNF was behaving strong. And the tussle might even continue tomorrow because two main culprits which caused today's fall- Crude and Rupee- are likely to show same weakness tomorrow as well. As I wrote in post on Nifty , after surprise bombing at ARAMCO sites, things will have to be looked from different perspective. One, because we import 80% of our oil requirement; two, half of ARAMCO's daily throughput capacity is cut; three, Oil likely to remain above $65 for next few days; four, oil import will cause massive dollar outflows which will put pressure on rupee. All these factors will affect FII investments since they look from currency adjustment point of view too. So on this backdrop, how do we trade BNF?
1) Option Chain data- On PUT side, highest total OI (5.99 lakhs) is at 27500 but there is very less Put writing (only 620 contracts) on this strike. Highest Put writing of 80,640 contracts is at 27600 which has total OI of 3.21 lakhs (3rd highest). On strikes starting with 27800 and above there is unwinding but not massive. The total OI on 27600, 27700 and 27800 is above 3 lakhs each. So as can be concluded, there is no clear consensus between Put writers as which level can act as good support. On CALL side, near CMP , highest total OI (5.90 lakhs) is at 28000 but highest fresh Call writing (2.50 lakhs) is at 28200. At 28500, which is quite far from CMP we have highest total OI and highest fresh Call writing. But for tomorrow, 28200 looks very reliable resistance.
2) Charts- BNF finished as a candle with lower high and higher low. Low made during initial minutes of 27798 was not breached throughout the day. But it cannot be said with confidence that this won't be breached tomorrow. At lower levels there is a buying area marked on chart. Since the overall scenario is and dicey for next few days, take any buy trade with strict SL.
All the best. Happy trading.