17 Jan ’24 — How the Mighty has fallen! — Nifty & BankNifty PostMortem Analysis
Nifty Analysis — Stance Bearish ⬇️
Recap from yesterday “We would like to give one more opportunity for Nifty to hold its ground. We would start the day tomorrow with a neutral bias and wait for Nifty to fall below 21913 to go bearish.”
Not only did Nifty50 open 360pts gap-down, but it broke the 21913 support. This was the laxman rekha for us below which we had to go bearish. It all started when HDFCBK -8.44% started giving up points like crazy. The results announced were alright per se, but the signs of NPA going up and EPS staying the same would have unnerved the FIIs. Nifty ended up losing another 100pts to close at -2.09%. When was the last time you saw a 2% or more fall in Nifty50. Even when SPX and NDQ had multiple episodes of 2%+ falls, Nifty50 was showcasing its resilience.
Yesterday Nifty was at the top end of the ascending channel and today it closed right at the bottom end. From 26th Oct 2023, Nifty has always respected the bottom part of the ascending channel. The next support comes up at 21491 and falling below that would also mean we are breaking the channel. We changed the stance from neutral to bearish in the opening minutes, hope you got the email via TradingView minds when we pivoted.
BankNifty Weekly Analysis
Between the last expiry and today, BankNifty has fallen 1274 points ~ -2.69%. It may not look so dangerous, but keep in mind we had a swing range of 2328pts ~ 4.82% between the high to the low of the week. Of these 2328pts, 2060pts ~ 88.4% came just today.
BankNifty Analysis — Stance Bearish ⬇️
We opened 1423pts ~ -2.96% gap down today. The first 2 candles were green showing some fightback to reclaim the 47465 S/R which we just broke. BankNifty’s support break was the major highlight anyway — It was right below the bullish trend line and above the bearish trend line yesterday. The breakdown from there was the real impact.
The option prices were absolutely crazy, especially on the CALL side. The premiums remained elevated right till 15.00. The PUT options on the other hand (far OTM) had given up the premiums even though it had some unusual surge in the opening minutes. Most of the traders would not have capitalized on the premium spike as by the time they punched the orders, the premium would have evaporated.
The price action today paves the way for further downward action. Primarily both Nifty and BankNifty are in the same stance (bearish) and secondly, N50 has just violated the ascending channel whereas BN steered clear on 1st Jan. The biggest issue is that the next support comes at 45399 followed by 44542 and both indicate steep cuts.