Bank Nifty in sideways momentum, traders say wait and watch to trade for next weekly expiry

. BankNifty has been hovering and consolidating near the 50000 zone for quite some time finding resistance near the 50200 levels and support maintained near the 49500 zone as of now

Bank Nifty has been trading in a sideways to consolidative momentum for the past three sessions. At 1 pm on June 13, Bank Nifty was trading at Rs 49,960, up 65 points or 0.13 percent.
"Bank Nifty seems to be in consolidation momentum over the past few trading sessions. One should wait and watch, as it has not given any hints of a strong directional move. Only when key supports or resistances are breached should one take a trade for this weekly expiry," said Shijumon Anthony, a derivatives trader.
When asked if taking straddles in sideways momentum is a good option for Bank Nifty, Shijumon replied, "Taking straddles at this point in time is risky, as a strong directional move can lead to huge losses if Bank Nifty sees one-sided movement."
Trader Rajesh Srivastava also advocates waiting for the Friday, June 14 session before taking positions for the weekly expiry. He believes that there has usually been a sell-off before the Advance Tax date, due on June 15, over the past two quarters.Technical view: Where is Bank Nifty headed?
Volatility remained extremely high in the previous week, with Bank Nifty making fresh life high on Monday, June 3. However, the index underperformed in the latter part of the week, gaining just over 1.5 percent, compared to more than 3 percent gains in Nifty. The underperformance of key sectoral heavyweights was the major reason behind Bank Nifty closing the previous week below 50,000.
"Considering significant delivery buying at lower levels, we believe that Bank Nifty should move towards 51,500 in the coming sessions,” ICICI Securities said in a note. The brokerage also expects short covering in a few large stocks to support the index.
“HDFC Bank, Axis Bank, and Kotak Mahindra Bank are near their call bases. If the current momentum continues and these private banks sustain above current prices, there is a high chance of short covering among call writers, which should help Bank Nifty to cross the hurdle level of 50,000,” it added.
ICICI Securities expects the banking index to be in a range of 48,500-50,000 for the next week, going by the put options and call options data. "After the election outcome, the VIX cooled off sharply, and writers are gaining confidence, with writing observed near the 48,500 and 49,000 put strikes. For the next week, these levels should act as important support while the current momentum may accelerate above the highest call base of 50,000," said ICICI Securities.

Also read:Nifty up but may correct from here; 2 option strategies for bearish or sideways view on weekly expiry
Brokerage house JM Financial said that the Bank Nifty has Open Interest Put Call Ratio (OI PCR) at 0.92 as against the prior day’s 0.8. It noted major additions at 50,000 and 50,500 Call options. The highest Open Interest in Call and Put options is at the single strike of 50,000. At-the-money (ATM) 50,000 straddles are pricing a 900-point move for the June 19 expiry. Weekly range: 49,000-51,000
View: Choppy near 50,000; Positive till above 49,000
Levels to watch: Resistance 1: 50,300; Resistance 2: 50,850; Support 1: 49,500; Support 2: 49,000."

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