11th Oct ’23 — Cuts Through the Resistance, More power to the bulls!
Nifty Analysis
Nifty continuing from the good form it picked up from yesterday, we opened gap-up of 76pts and then went on to take out the resistance line of 19776. The low formed in the opening 5mts was not broken showing how powerful the bulls were. We rallied another 71pts to hit a high of 19839. Interestingly Nifty did not fall or retrace from these high levels. The 19800 level was proving tough to break.
We had a perfect island day today above the resistance level of 19776. My bullish view continues and the next level to watch out for will be 19901 which was tested on 11th and 20th Sep. It just took 2 days to recover from the fall we had due to war — sometimes I think we have not priced in the real impact of it. Crude oil if it remains elevated will prove to be such a disaster for us as we are importers.
BankNifty Weekly Expiry
Between the last expiry and today, BankNifty has gained 525pts ~ 1.2%. The fall on 9th October was nicely covered up by the price actions on 10th and 11th. This is the 2nd time BankNifty has recovered after falling below 44068, the bulls are still strong.
BankNifty Today Analysis
There were many things different about the expiry today. We went in with very low options premium. So when we opened gap-up of 180pts the option mispricing was very much evident. It took a while for the CE options to start surging — most interestingly the OTM call options went on to make day’s high after BankNifty started cooling off from the day’s high. Few of the OTMs surged above 120% — quite unbelievable.
If I draw an orange line from the recent double-top formation — it ends up right at today’s intraday high. The inability to break this interim top will become a problem for BankNifty bulls. Nifty on the other hand managed to cut through the resistance, BankNifty is still undecided. This is the main reason I went with a neutral stance yesterday, even though we ended the day with 0.35% gains — the bulls are not strong yet.
For tomorrow I wish to go long only if BankNifty manages to take out the 44712 interim resistance in the opening hour. Ideally, it should be able to do it as HDFC Bank was looking quite dangerous in the afternoon session. These days NiftyIT has more fluctuation and volatility than BankNifty making it an interesting candidate for FnO — Still not sure why NSE has not considered it.