16th Nov ’23 — A Breakaway momentum hard stopped by RBI’s CAR news — PostMortem on Nifty &…
Nifty Weekly Expiry Analysis
Between the last expiry and today, Nifty50 has gained 359pts ~ 1.85% and broken 2 important resistance levels. We almost took out the 19776 resistance today but for a strong red candle @ 14.15.
Nifty Today Analysis
Nifty opened inline and then was steaming ahead, As we discussed yesterday it took out the 19776 with so much ease. The 3 5mts candles between 11.00 to 11.10 showed how the momentum picked up right before the resistance zone which kind of indicated that the rally was not going to slow down. By 13.55 we picked up more pace, quite visible by the FII participation on the BUY side. We hit an intraday high of 19875 by 14.45 and then something unplanned happened. We dropped 153pts in the 25 minutes, we will explain that in detail during the BankNifty Analysis below.
On the 1hr chart, we closed slightly below 19776, the 14.15 hourly candle is well-lit like a beacon. I am still continuing my bullish stance in the hopes that 19776 will get taken out during the forenoon session tomorrow. If not, I will be changing my stance to neutral and will update it via tradingview minds.
BankNifty Analysis
Banknifty did not have the fuel to rally today, unlike Nifty50. The major reason was because NiftyIT was doing all the powerlifting today (closed 2.69% higher). Between 11.00 to 11.15, I almost thought BankNifty may participate in the rally and take out the swing high of yesterday.
We had the first cooling off between 11.15 to 12.30 — something that said BN is not interested in going up. Then there was a broader rally between 13.50 to 14.45 where BN also participated and this time we took out the swing high. 99% of traders would not have predicted what would happen next.
We fell 358pts ~ 0.81% between 14.45 to 15.10, at that moment I had no idea what could be the related news that triggered it. Later found out about the RBI’s risk flag regarding new loans especially unsecured, credit-cards & loans from banks to NBFC — source. What we understand is that RBI has hiked the Capital Adequacy Ratio by 25% for a few types of loans. CAR is a measure of the strength of the bank if a majority of its loans default. This could just be a warning shot & I would like to dig into this information as time permits. A few starting points would be the bank’s recent loan growth, the percentage of unsecured loans, and the real impact of the recent rate hike that got progressed to the end user.
On the 1hr TF, BankNifty retests the 44063 support today but its well within the ascending channel envelope. I wish to change my stance from bullish to neutral and would like to go bearish if 44063 gives away in the forenoon session. To go bullish, I would wait till 44542 is broken on the hourly candle.