10th Nov ’23 — Diwali Buyers are here already? — PostMortem on Nifty & BankNifty
Nifty Analysis
If you watched the opening 45 minutes today, you would have believed that the chances of breaking 19310 were pretty high. The intraday low was 19329, just 19pts away from our go-bearish target. The main reason we had a weak opening would be attributed to the weak handover from US markets yesterday. SPX closed at -0.8% yesterday.
Our markets had other plans today, the LOD was hit in the opening candle itself and then we started climbing. We climbed all the way up to 19446 resistance level and got timed out. So what was this outperformance all about? I guess people are ready to empty their DIWALI wallets to buy new stocks.
Except for the first candle, all other candles were in green and somehow gave the impression of strength. It really takes so much power to rally right from the support zone to the resistance zone, so what Nifty50 did today was amazing. For monday, I wish to continue with the neutral stance — but a slight bias to the bullish side after seeing today’s momentum. The first level to watch will be 19562 on the upside and 19310 downside.
We have a Muhurat Trading session at 6pm on Sunday 12th November as part of Diwali festival. Usually, people buy stocks for the long term on this special occasion. By default it is a bullish activity because more people come with the intention to buy — but I personally have no bias as I dont buy stocks when its overvalued. All these days, I was looking at how overvalued our stock indices were compared to global peers when Karachi100 got my attention. The chart below will amaze and amuse you. From June 2022, Karachi100 is up 37.87% compared to Nifty +3.48%.
BankNifty Analysis
The real reason why Nifty50 reversed course today — BANKNIFTY. Yesterday we discussed how it took out the swing high set on wednesday. You wont believe that we took out yesterday’s swing high today even after opening with deep cuts.
In the opening minutes, we dropped to 43504 well below the first support of 43566. I really thought the support would yield, but it did not. By 10.10 we started climbing. BN took a rest at 13.00 after which there was a minor retracement. Then at 14.50 we got our 2nd leg of climb that went all the way up to 43908. It sure looked like Dhanteras/Diwali buying.
On the 1hr TF, I have drawn an ascending channel with the first target to beat being 44063. I wish to go bullish above that, till then I will hold on to my non-directional bias. I will not be writing about Muhurat trading on Sunday, but will mention any anomaly in my Monday report.