06 Feb ’24 — Nifty takes out the resistance of 21319 on lower TimeFrame — Nifty & BankNifty…
Nifty Analysis — Stance Neutral ➡️
Nifty does the tough job today — to take out the resistance of 21913. The real job of going bullish is so easy tomorrow, all it needs to do is hold the ground and the bulls will bring the momentum for the rally. Over the last 3 trading sessions, we witnessed 2 failures i.e on the 2nd and 5th Feb. Today against all odds, we opened at a level quite lower than this resistance area and then managed to pull up to the zone and then beat it. In a way, the slow and steady grind is much powerful as we have seen that this market rarely gives leeway to the Bears. BankNifty was not at all supporting Nifty and almost all the gains came from the NiftyIT stocks. NiftyIT closed the day with a super strong gain of 2.92%.
The good news of the resistance break is only for the lower time frame. Nifty is still undecided on the 63mts TF and for that same reason, we wish to start the day tomorrow with a neutral bias and then go long if we have a green candle above the 21913 zone. Only if BankNifty lends support we can take out the ATH and there is no better day than the expiry day for such feats.
BankNifty Analysis — Stance Neutral ➡️
Is BankNifty bearish? — absolutely not. Is it bullish? It’s too early to say. One thing is sure — there is some weakness impacting the banks. Are the unsecured loans haunting them? None of the balance sheets from the quarterly results are bleeding — but something is still bothering them. Today was a fine day for the banks to support Nifty’s rally — still, the banks decided to stay on the bench.
One thing is sure, the fall looks like arrested (for now). If Nifty takes out the ATH without the support of the banks again, then it is some indication that the Information Technology players may have taken over as the new torch-bearers. There are exactly 6 NiftyIT companies in Nifty50 as there are 6 banks in BankNifty. NiftyIT weight is 14.18% vs 33% of BankNifty — definitely, BN has lost some ground and IT has gobbled it.
The perfect Inverse Head and Shoulders pattern has not formed yet — we still have 20% of the move remaining. We will closely monitor if BN chooses to follow this path as it is a bullish sign. The first clue came in when BN defended its support at 44542, the 2nd came when 45399 was defended. Tomorrow is the weekly expiry and we hope to see some actions — at present, the OTM strikes are not that juicy — if BN decides to move, we could expect some mispricings to pop in.
Our BankNifty algo trades ended today with a gain of Rs8121.
