20th Dec ’23–500pts Nifty Reversal Day — Stance is Bearish Now — PostMortem on Nifty & BankNifty
Nifty Analysis
4mts chart link — click here
The craziness needed no explanation as the excess got shaved off today. Nifty hit a new ATH @ 21593 and then fell a whopping 506pts ~ 2.34% to close at 21101.5. TradingView minds section was not functioning today, and I felt really helpless to inform you when we reversed the stance.
Nifty took out the 21407 only by afternoon, but instead of going neutral — I went bearish directly. The reason was — Nifty made a climb of 146 points first and when it fell to 21400 — the fall ended up approx 193pts ~ 0.9%. That did not look like a neutral price action to me and thankfully Nifty fell another 300pts to cement that idea.
63mts chart link — click here
The price action on the 63mts TF does not look bearish per se. But notice the weight of the RED candles — we retraced right up to the ascending channel top envelope. The reason for a change in stance to bearish is just because of momentum. I will explain a bit more in the BankNifty Postmortem below.
BankNifty Weekly Analysis
Between the last expiry and today, BN is up 103pts ~ 0.22%. During this week BN hit a new ATH of 48219. Today’s 425pts reversal came as a setback otherwise we would have had another superb weekly closing.
BankNifty Today Analysis
It all started with BankNifty today, the options flow was indicating immense bearishness. But Nifty50 options flow was showing strong bullishness. This contrasting directional bias barely works in our market. And 9 times out of 10, Nifty50 mends its way to go as per BankNifty’s directional bias. The reason is, BankNifty is still the leader of the pack.
4mts chart link — click here
So first, the collusion again with NiftyIT to get Nifty50 to get to a new top and then a meltdown. BankNifty shaved off 967pts intraday after getting a gap up open. The candle at 13.27 ensured we were re-entering the ascending channel. Just like we discussed yesterday — the directional move came and we were not caught off guard.
You might have guessed when we went short today, yes as soon as the ascending channel top line was breached. The ensuing momentum gave us confidence in the bearish bets. What was more surprising was the breach of the bottom line of the ascending channel — I honestly did not see that coming.
63mts chart link — click here
Technically Banknifty has not moved that much today, we just dropped 0.89% compared to 1.41% of Nifty50. There were some outliers today, ADANIENT -5.35%, ADANIPORTS -5.76%, RELIANCE -1.21%, LT -2.3%.
And the subsectors were all in RED. I seriously do not know if it is a serious correction phase as the runup so far has been like a dream. The chances of something happening like this were quite evident today. BankNifty options premiums were screaming bearishness — I thought it was because of the expiry. And Nifty50 was showing strong bullishness. I bet my money on Nifty as the options prices were more rational as it was not expiry related. But since the BankNifty’s premium’s were not dropping — It gave me the warning shot. Quite fortunately was able to catch the top and low of a few strikes correctly. Also was able to switch between BN and N50 strikes quite seamlessly to take advantage of the mispricings. Who in the world will believe 22700 CE of Nifty50 had a premium of Rs3 for 1 DTE i.e. a strike 1500pts above spot?