Most popular strategy to trade in Bank Nifty ?
Bank Nifty is an index which is representing the banking sector in Nifty. It is comprises of top 12 banking stock of stock market. Bank nifty calculated on free float market capitalization in the market. Now a days Bank Nifty in most volatile index in our country which is favorite among traders.
Brief details of Bank Nifty are giving below :-
| Index Name | Bank Nifty |
| Current Market Price | 25000 as on dated 4th Oct. 2018 |
| Date of Inception | 15th September 2018 |
| Base Value | 1000 as on Jan 1, 2003 |
| Expiry | Monthly and Weekly |
| 5 Years Return | 19.55 % |
| Total Return (Since Inception) | 21 % |
| PE Ratio | 58 |
| Total no. of Bank | 12 Banks |
| Lot Size | 40 |
| Margin Required | 10% Approx. |
| Daily Movement Expected | 1% to 2% Average. Means 250 to 500 points |
Bank Nifty Weight-age by Banks :
| HDFC Bank Ltd. | 33.27 |
| ICICI Bank Ltd. | 17.29 |
| Kotak Mahindra Bank Ltd. | 13.48 |
| State Bank of India | 9.11 |
| Axis Bank Ltd. | 8.77 |
| IndusInd Bank Ltd. | 7.64 |
| Yes Bank Ltd. | 4.97 |
| RBL Bank Ltd. | 1.84 |
| Federal Bank Ltd. | 1.26 |
| Bank of Baroda | 1.14 |
How to trade in Bank Nifty :-
Bank Nifty is a derivatives contract so first you need to activate F&O segment in your demat a/c.
Trader ensure that minimum 2 lakh should be in your portfolio before trade so that if you face MTM pressure your position would be safe. We frequently can buy sell the nifty as per signal given by the technical analysis. Bank nifty trading strategy for intraday and deliver are based on the news also because whenever the RBI change the interest rate in the country it react a lot due to direct connectivity of the banking sector to the interest rate. So we have to keep eye on monetary policy of RBI time to time.
Bank Nifty also have huge volume in option trading. Because of the weekly expiry trader are always attractive towards to the bank nifty options. Traders are getting nice opportunity every week because its easy to arrange cash flow for one week rather than a month.
Bank Nifty Trading Strategy :-
- If the volatility is high :-
- Long Strangle
- Short Call butterfly
- If the volatility is low
- Short Strangle
- Long Call butterfly
Note: Use stop loss always in Bank Nifty Trading because it is high volatile index and simultaneously check open interest time to time of current month future contract.
Risk and reward ratio must be 1:4 in bank nifty and but in certain condition it can not go below 1:2 level.
