12 Jul ’23 Post Mortem on Nifty & BankNifty | Will the bulls be back tomorrow?
Nifty50 Analysis
We had 2 downward selling momentum, the first one mainly due to the gap up opening — which saw a loss of 106pts by 12.00 and then the 2nd one between 14.40 to close which erased 99pts.
Technically Nifty has fallen only 55pts today, the gap-up messed up the numbers. So we had a dip below the yesterday’s swing low and retraced all the way to the close of 10th July.
The 19504 level is proving to be quite a resistance, rightly so because its the ATH levels. To break free Nifty needs more momentum & the only way to do that is reverse from a sharp fall. Well it made a try on 11th but failed.
The 1hr TF has still not turned bearish, for that to happen we should fall below 19301 within the opening hour tomorrow or close the day below 19338.
There will be 3 things to watch out tomorrow.
- India’s MoM CPI comes in higher at 4.81%
- US CPI comes in lower at 3.0%
- HDFC gets delisted on 13th July
Trades Taken & Rationale
I was quite surprised to see the gap up open today and the 19300/19400 CE bullish debit spread was trading profitably. I almost had complete belief that N50 will not fall that much. Even when we hit an intraday low by 12.03 my position was deep in losses & did not square off.
You wont believe I got panicked by seeing the 13.35 candle, somehow it did not feel right & eventually I closed the position at loss by around 13.42. The prices were 19300 @149.7 & 19400 @72.25. By around 13.50 I started feeling guilty to have over reacted and thought of entering into another bullish spread in the 20th July series.
But seeing the 15.00 and 15.05 candles, my guilt turned into relief. Had I held onto those trades the losses would have been 3 times more.
BankNifty Analysis
You wont believe banknifty only fell 0.24% vs Nifty50 0.28%. But if you look the chart pattern, the feeling you get is total bearishness. This is mostly due to the previous session’s price action & a continuing lower high pattern.
The 09.20 candle itself fell by 162pts, and then the late selling adjustments in HDFCBK, ICICI, SBI & profit taking in Kotak Bank all led to a fall of 310pts between 14.40 to 15.10.
Since HDFC is getting delisted, a minor was fall was expected as all the future dated expiries will end today. This will also lead to price correction on HDFCBK to maintain the ratio arbitrage.
How tomorrow is going to shape up is still remains a mystery, during the closing hours there was immense shorts getting written at CE side. If Banknifty has to support Nifty50 then it needs to break out from the lower high pattern.
Hoping tomorrow’s expiry will be a volatile one!
You can read my latest book “58 post mortems on BankNifty Q1 FY2023–34 on amazon — click here
PS: The trades taken are no recommendation, blindly following them may cause more harm than good — read full disclaimer here