27 Jul ’23 Post Mortem on Nifty & BankNifty + Weekly & Monthly Analysis + Back to bearish mode? 🐻
Nifty Monthly Analysis
Nifty is up 707pts ~ 3.73% this July Expiry month. The breakout from the last known resistance of 18880 came on the last working day of the previous month. All Nifty had to do was sustain that momentum and see where it has taken it? Almost for 11 days Nifty revised its all time highs. The last 5 days has been pretty unlucky for the bulls.
Nifty Weekly Analysis
Probably this was the only week in this month that belonged to the bears, we dropped 268pts ~ 1.34% between the last expiry and today. And this is the first week in this current month where nifty did not hit a new all time high. Although I had taken the short position from last friday, it was negated in the trade yesterday. And I am back to square one today as Nifty shows bearishness.
Nifty Daily Analysis
Nifty fell an impressive 264pts ~ 1.33% today and did 2 important things today.
- Broke the island gap formation of yesterday, immediately negating the bullish stance
- Broke the swing low of day before yesterday confirming continuation in bearish stance.
In yesterday’s analysis we did discuss the possibility of a fake move if Nifty retouches the 19600 levels. I wanted that to happen in the forenoon, but it happened only by 15.00. And the last 30mts nifty gained back 100 points to close in decent territory.
The 2 abrupt moves took out my stop losses in either direction, so this week it was all learning and no earning 🙂
Yesterday’s island formation encircled, to enter the prior session’s bearish stance — nifty will have to fall below 19540 tomorrow. This may seem quite too much as US markets SPX, DJI and NDQ are currently celebrating better than expected GDP data. Regarding the options premium behavior — I will discuss in the banknifty analysis below.
Banknifty Monthly Analysis
Banknifty has moved up 1353pts ~ 3.05% this expiry month, approx. 0.7% lesser than Nifty’s movement. One possible reason was the slight retracement between 07 to 14 July whereas Nifty had managed that week pretty well.
BankNifty Weekly Analysis
Banknifty scored over Nifty during the weekly price move wherein BN lost only 0.85% ~ 391pts compared to 1.34% loss in Nifty. It was for this reason that we had gone short in Nifty last friday and did not do anything on BN.
BankNifty Daily Analysis
The day started quite boring today, we had a gap up opening due to which all the options premium were absolutely dead. I started expiry trades with Nifty options as they had more air left in it vs bank nifty. But as soon as the fall started, the CE premiums were jumping exponentially. This was true for Nifty options also. To get a favourable price I had to wait till 12.45 after which I switched to banknifty options.
The CE premiums remained unusually high 14.15 after which they started dropping. While all this happened India VIX did not swing that much — remember we even had a -10% day this week on volatility. Probably VIX thinks the downward move is again a positional one & will be done and dusted by tomorrow?
We see a M pattern i.e double top right at the all time high levels. Such a pattern cannot be left unnoticed and today’s move may just give it more relevance. On a 1hr TF we had all red candles today except the last one(which had only 15mts in it)
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