The Indian stock market has faced significant challenges in the first week of October, with benchmark indices experiencing their worst performance in two years. The Sensex and Nifty 50 both saw declines of around 4.5%, reflecting a broader trend of market instability.

On Friday, the Sensex fell by 808.65 points, closing at 81,688.45, while the Nifty 50 decreased by 235.50 points, settling at 25,014.60. Amid this downturn, Bank Nifty has found support at the 20 EMA level of 51,300, indicating a potential short-lived bounce. However, momentum indicators suggest an oversold condition, which may lead to a brief recovery.

Despite the possibility of a bounce, the weekly chart shows Bank Nifty closing below the upper Keltner channel, indicating the potential for further declines ahead. Key points to consider include:

• Increased options writing at the 51,500 level points to ongoing weakness in the index.
• A low-risk options strategy is recommended, targeting a decline below 51,200 by the weekly expiry on October 16.
• This trade requires a capital of ₹43,000, with a maximum loss capped at ₹1,000.

Traders are advised to enter the position if Bank Nifty is trading between 51,500 and 52,000, aiming for a profit target of 2% to 3% based on individual risk appetite. It is encouraged for investors to consult certified experts before making any investment decisions.

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