19 Jan ’24 — Holiday Change at 7 PM — Are you ready for BANKEX expiry tomorrow?
Nifty Analysis — Stance Neutral ➡️
The entire price action for today was totally odd. No, I am not saying this because I lost money trading today. Firstly, the decay was not there on option strikes. Secondly, The far OTM strikes of BankNifty closed at values higher than yesterday — that is a huge anomaly. Nifty OTM PUTS closed at values higher than yesterday that too when the underlying moved up 160pts ~ 0.75%.
Everything made perfect sense when the news broke out that stock markets will be fully functional tomorrow 20th Jan and we will be closed on 22nd Jan Monday. Seems like we are making a fool of ourselves. Was this information passed on to the institutional desk in advance? Will the FIIs now work tomorrow and undo the positions they took for today? How will they hedge the trades as Depository Receipts will be closed on Saturday? The first thing any foreign investor would want is stability and things like these can hamper confidence.
The open was right at the ascending channel lower trend line and our view of bearishness was still relevant as we did not breach that resistance. Interestingly, we were not falling either. FII data for today, a sell value of 3689 crore made no impact on Nifty today. Assuming a segment of people knew what was going to happen with the shift of holidays. Nifty managed to hold its ground today and because of that — we have to change the status to neutral from bearish.
The last 3 candles almost gave away the clue that bearishness was ending. We would still like to see how Nifty will open tomorrow. Ideally, it should open above 21698 i.e. within the channel to cement the idea that Bears are thrown out of control. Also, there will be a portion of traders who would have not taken positions assuming Monday is a working day — speculating a small FOMO effect could misprice the options during the opening minutes.
BankNifty Analysis — Stance Bearish ⬇️
The stance for BankNifty was bearish yesterday and it is still bearish today. The highs and lows of today were more or less matching with the levels of yesterday. Visually the price action is more negative than yesterday, the reason being the highs hit today were due to gap-up whereas yesterday’s high was via fighting it out during trading hours.
From the highs to the lows today, there was a swing range of 688 points. Just that the gap-up hides this in plain sight, after all the index closed flat at -0.03%. The change in holiday schedule is going to impact BankNifty the most as BANKEX expiry which was on Monday will have to be conducted tomorrow. Quite sure the traders were not prepared for this event and the opening minutes could create some chaos. We are not even sure if the technical analysis will work out tomorrow.
Look at the encircled region — all RED candles. How many analysts do you know who would say these many consecutive red candles are a bullish sign? None. Despite this, BankNifty could move up tomorrow as the news flow of holiday change was not priced in. BANKEX has a close correlation with BankNifty and logically traders would use the opening minutes to build expiry positions tomorrow. Since FIIs were not informed, they would come tomorrow unprepared. If there is sanity tomorrow and BankNifty starts moving downwards — the first level to watch out for is 45399. To go bullish — it has to climb 1765 points.