10 Jul ’23 Post Mortem on Nifty & BankNifty | A Calm Before The …?
Nifty Analysis
The day started with a gap up at a 50% level between the high & low of the last session. From there we saw 2 to 3 candles of fall, but nothing serious to retest yesterday’s swing low.
From 09.35 to 10.40 we had a good rally up to the 61.8% retracement levels. And then we had a fall of 0.54% ~ 104pts till 12.05. A small pullback till 13.55 and then a fall again of 0.4% ~ 77pts to the same 19334 levels.
Why is 19334 level so much interesting, read the 03 Jul analysis here. The interesting part is that even though we had 2 falls today & the price action from the previous day also showed bearishness — I went long today (will explain the rationale shortly).
Trades Taken
The first trade taken around 10.24 AM when N50 was surging. I exited the bearish credit spread of 19500/19600 CE at a negligible profit & went long by initiating bullish credit spread of 19400/19300 PE.
19400 PE sold for 70.2 & 19400 PE bought for 36.05. At that particular timestamp the trade felt okay and hence punched. After the day’s close & analysis — I feel it was not that necessary. Nifty was not that bullish nor bearish today — it was just a calm day.
If N50 falls tomorrow, I will have to exit the bullish credit spread at a loss and re-enter the bearish credit spread. Lets hope today’s time decay will give some advantage!
BankNifty Analysis
Banknifty on the other hand was not at all bullish. Even though we had a rally from open to 09.50 — there was no motivation to go long.
The 2 horizontal blue lines drawn depicts the gap BN had earlier. Today’s session ensured that is closed which might even open up further downward moves.
I am not quite sure how HDFCBK pricing & index weight re-configuration will affect after the delisting of HDFC on 13 Jul. My first marked support level is at 44068 which is quite far from the current traded level.
You might remember the breakout rally mostly came as gap-ups mainly spear headed by HDFCBk. Assuming there will be some jitter once the delisting of HDFC happens. I thought just to wait out for some clarity before building up positions on banknifty.
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PS: The trades taken are no recommendation, blindly following them may cause more harm than good.