05 Jul ’23 Post Mortem on Nifty & BankNifty | Underestimated the closing 30mts
Nifty Analysis
I had a feeling that we are nearing a top after seeing the price action on 03 Jul. The 4th Jul session was also cementing that thought. And today’s session till 14.35 was giving me lot of confidence to take a short position.
But what happened from 14.40 to close, esp. 15.500 to 15.10 was simply unbelievable. Nifty rose 0.42% ~ 81.3pts to end the day flat at 0.05% gains. The strength in that recovery is now putting a big question mark on my interim top call. Although we did not take out the ATH today — that momentum would have crushed the hopes of many bears.
Last day we discussed how we require strong CE shorting to start a downward slide, unfortunately that was not visible today.
1hr TF
Ever since we had that breakout from the 18880 levels, N50 has appreciated another 3% ~ 569pts. Either the rally is over extending or the bullish sentiment is so strong to wipe out the bears.
It is quite easy for N50 to scale up as there are no more friction points, similarly its much easier to breakdown as we dont have support points too. The last 30mts of today’s trade has given confusing signals now. I have marked a trading band between 19304 to 19415 (length of the 1st hour candle on 04 Jul). Till this band is not broken — I have decided not to take any bets.
BankNifty Analysis
Banknifty’s chart was looking quite different from that of Nifty50 today. This might be because of the -3.18% fall in HDFCBK. Finnify was looking weaker as the HDFC also weighed its -3.07% loss. Earlier in the day N50 was struggling to stay green after this duo tanked.
BN followed a falling channel today, the rally in last 30mts made a difference but was not standing out just like in N50. Seems like the technical analysis may not work till the HDFC-HDFCBK merger saga is over.
- Delisting of HDFC will happen on Jul 13th
- NSE will have to reconfigure the index weights of HDFCBK after the merger.
The unusual up and down moves for these 2 stocks may be resultant of that, and until we have clarity — its better not to take positional bias.
1hr TF
BN has not closed the island gap yet, even though there has been some cooling off from the ATH levels.
The price action so far is not helping in taking a bearish position yet. Again it is best we wait till the merger completes so that we can trade with absolute clarity.
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