01 Jan ’24 — Shocking Last 30mts like a Tsunami — Nifty & BankNifty PostMortem Analysis
We have compiled the last 3 months of work into an Amazon Kindle ebook with the title “60 Post-Mortems on Nifty & BankNifty Q3 FY23–24” — request you to take a look and provide suggestions.
Nifty Analysis — Stance changed to Neutral ➡️
Recap from yesterday: “Nifty is still way above the ascending channel showing bullishness. As long as the soft support level of 21652 is respected, we do not wish to change the stance.”
4mts chart link — click here
Everything was going as per the plan, we even hit a new all-time high of 21834, but the last 30mts of price action was more severe than a Tsunami. Earlier in the day, was quite disheartened to hear the 7.6 Earthquake in Japan and the Tsunami alert. During those hours even Nikkei 225 futures were trading flat. We were watchful for any spillover effect to our markets but got nothing.
BankNifty options flow was suggesting bearishness right from the start, the calls were unusually overpriced vs the puts indicating a higher number of CE credit spreads getting written (bearish).
NiftyIT 4 mts chart — click here
NiftyIT was trading in RED, so we almost gave up the hope of having a new ATH today. After a while, NiftyIT turned and turned quite big — the reversal was 536pts ~ 1.52% from the day’s low. And when NiftyIT reversed, it gave enough fuel for Nifty50 to take out the recent swing high and reach for new highs today.
63mts chart link — click here
The last candle is looking quite deep and has almost negated the progress of 3 days. If it was not related to any news/event, the outcomes match quite strongly for an interim top-like formation. Just for this reason, we are changing the stance from bullish to neutral for tomorrow. We will revisit the stance during trading hours tomorrow, if it was just a blip then we should be having a new ATH tomorrow.
BankNifty Analysis — Stance changed to Neutral ➡️
BankNifty was not able to break away from the lower channel line. Normally BN swings from the lower boundary to the upper boundary and follows a good correlation with the ascending channel. The last 30mts of fall ensured we broke the lower trend line. Ideally, the stance had to change to bearish — but we ran out of time for a full 63mts candle to form.
4mts chart link — click here
The fall was 408pts ~ 0.84% deep. The red candle that took out the channel trend line had a drop of 154pts. Both BankNifty and FinNifty were looking quite weak today — not sure of the reasons though. When NiftyIT turned and went into strong green — the banks also started lending support to Nifty50. And when the fall came, it was all banks.
63mts chart link — click here
The last candle closed below the channel, but the body is still touching the trend line. Just because of this reason — we decided to go with a neutral stance instead of bearish. The opening hours tomorrow will give us more clues anyway. FinNifty has expiry tomorrow and the stakes will be quite high for the banks to perform.