28 Feb ’24 — Nifty takes out 22051 support, quite unexpected — Nifty & BankNifty PostMortem…
Nifty Analysis — Stance Neutral ➡️
Nifty did fall today and the trigger was a news/event. AMFI issued a circular to all the Trustees to “protect the interest of investors of small-cap and mid-cap schemes”. And then gave a 21 day window to disclose this instruction on the respective websites. Ideally, this shouldn’t impact the large-cap companies, but since it did — we may have to reassess the total risk to SIP inflows and outflows.
Coming back to technicals, Nifty50 fell 314 points today ~ 1.42%. The first pause Nifty50 had today was at the 22051 support level, from 10.59 to 14.15 this level was at play. Even though we got the 2nd leg of fall from 12.51 to 13.11 — the pullback ensured we retraced up to the 22051 erstwhile resistance. And guess what, Nifty had its next halt right at the 21913 support level. Literally saved by the bell.
On the higher timeframe, today’s move negates the flag pattern and instead, we have a double top (M pattern). Since this M pattern’s both legs are sitting at 21913 — the priority should be higher than the bullish flag set earlier. If Nifty50 had broken the 21913 today, we would have changed the stance from bullish to bearish right away. Hence we are going with a neutral stance tomorrow and would immediately go bearish if we have a gap down opening or sustained trades below the 21913 after the opening hour. Since we have the monthly expiry tomorrow — there is no better day to go bearish. The options premium will go up and it should be an option seller’s day tomorrow.
BankNifty Analysis — Stance Bearish ⬇️
There is no doubt that the stance on Banknifty is anything but bearish. Even though we started quite okay, we quickly gave up the gains. After 10.23 the intensity of selling was quite strong. And once we came back to the bearish channel the depth of the RED candles kept on increasing. Banks were the first to react to the bad news along with RELIANCE. NiftyIT was still going on strong and was at the GREEN end of the turf. In fact, NiftyIT went into RED only after 11.43.
The double top M pattern and the bearish channel are better explainable on the higher timeframe. BankNifty’s next support comes at 45399, the momentum for the Bears will really pick up if we are to break that by tomorrow. That would also mean we are going back to the levels as of 18th Jan 2024. We are also quite sure, that could be a pain area for many traders who would have taken a monthly position.
HDFC Bank was very special today, it hit a low of 1405 by 10.59 — but the recovery after that was more than amazing. Till 14.27, things were not looking that bad either. However, the final 1 hour ensured that the selling on this counter was far from over. HDFCBK has a higher weight on Nifty50 than RELIANCE. Also, it commands 2 other indices — BankNifty and FinNifty also. So if this elephant starts rolling, it would be a treat to watch for the BEARS.
Algo Trading
Our algo trades ended today with a gain of 15606. This is the 3rd day that we have exited the Algos prematurely. Today, we closed the trades @ 10.07 as my gut feeling said something was fishy.
· Intraday Algos run via AlgoTest on Kotak
· Webhooks automation run via TradingView on Dhan