04 Jul ’23 Post Mortem on Nifty & BankNifty + FinNifty Expiry Day Analysis
- FinNifty Expiry
Just like yesterday, the jump in options premium at CE side was explosive. BAJFINANCE +7.19%, BAJAJFINSV +5.8% was the main reason for the gap-up opening.
This screenshot was taken at 10.12 almost near the end of the opening 1hr, Finnifty was around the 20300 level. Its quite understood when the near ATMs has so high premiums — but the far away OTMs is unusual. 21000 CE was trading at 1.35, usually a strike 700pts away on expiry day would have premiums of 40 to 50 paisa around the same time.
If you really saw the price action, the real rally came between 11.35 to 13.25 period when the index even went to 20577 levels. This surge was mostly contributed by SBIN & KOTAKBANK along with HDFC twins which were already out-performing.
There was a dip of 0.9% between 13.30 to 14.25 — was that profit taking or signs of tiredness? I dont have the answer to that.
Between the last expiry & today Finnifty has gained 3.1% ~ 613pts. Its a remarkable achievement even when we had a holiday in between.
2. Nifty Analysis
Yesterday I was quite ambitious to call the top at 19334 + or 80pts levels, read here. The opening 45 mts and then the subsequent fall from 13.30 to 14.30 showed real signs of N50 running out of fuel.
But one thing that really proved me wrong was the intensity of credit spreads getting written at the PUTS side (bullish sign). Although there was lot of unwinding after 14.30, the issue is that CALL side credit spreads are not getting written.
If the run of N50 has to be checked we need CE shorts, aggressive big boys who do not run for cover. The lowest friction area for N50 to go is up as there are no resistances — thus making it a real tough spot for call writers. Personally I wouldnt dare writing ATM calls now even though I feel the top is near.
1hr TF
N50 for the first time in last 5 sessions closed the gap after a gap-up opening negating a consecutive spree of island day formations. The strong red opening 1hr candle stays lit and I am still inclined to keep the bearish view.
3. BankNifty Analysis
BN chart is interesting today, again just like N50 we had a falling 45mts open wherein BN lost 0.8% to go below prev. close.
From there it reversed and then rallied 1.46% ~ 655pts to hit a new ATH of 45655 by 13.30 mainly due to the rally in SBIN, KOTAKBANK. PNB +5.94%, FEDERALBANK +3.49% even though their weightage on the index is not that heavy.
Again the PUT writing was similar to N50, at a time we had all the PEs and CEs in green today (very rare). The call writers were searching for a opportunity to catch the reversal, even though we had a fall of 0.97% ~ 441pts between 13.30 to 14.25 — nobody would have really capitalized on it.
1hr TF
BN chart pattern unlike N50 was not compelling me to call for a top yesterday. But today I think it is showing some signs of a nearby top formation. The fall in the 13.15 hourly candle quite nearly showed the exhaustion.
But these are different times & markets are really going up. The breakout rally sure does have some mileage & it will take some time for a good reversal to come.
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