31 Aug ’23 Post Mortem on Nifty & BankNifty — Monthly, Weekly & Daily Expiry Analysis
Nifty Monthly Analysis
In the Aug monthly series, Nifty is down 387pts ~ 1.97%. This month did not produce a reversal signal even though there were 2 attempts on 24th & 30th respectively. As it stands Nifty is following a bearish trend channel quite efficiently. My next support comes at 18880, so if the fall were to accelerate in September, its good to know the next milestone.
Nifty Weekly Analysis
Between the last expiry and today, Nifty has fallen only 100pts ~ 0.52%. Not something unusual comparing the monthly fall. Interestingly we made an attempt to reverse the trend yesterday — but that got run by a truck today.
Nifty Daily Analysis
Today’s price action was a continuation of what we had yesterday. If you look at the chart below, it is tough even to make out the separator between yesterday and today.
The reason for the fall today may be attributed to the allegations on Adani by Hindenburg along with the OCCRP, a firm funded by George Soros revealing data about a possible insider trading & manipulation. The data available on the public forum is pretty skewed and I personally dont have an opinion on it right now. But of all the rules set by SEBI, the insider trading case is the biggest manipulation that is possible. Once the investigation gets completed and if the claims still stand — it is going to put a real awkward image about India and Indian companies among the FIIs and HNIs.
The fall that happened today was nothing in front of what could happen. On a headline level we just fell 0.48% today well within the average true range. But this fall of 93pts took out the hope of bulls to have a reversal. Not only we breached the support of 19310 today, we even took out the swing low of 25th Aug.
From tomorrow if we stay as it is, then the horizontal support line of 19310 will no longer be required. All that stays back will be the bearish channel. I wish to change my stance to bearish for tomorrow unless the 19310 resistance is breached.
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BankNifty Monthly Analysis
In the Aug month, Banknifty is down an astounding 3.73% ~ 1708pts vs 1.97% of Nifty50. Again telling the tale in advance, Banknfity has proved to be the real leading indicator during trending phases & reversals. On 24th and 30th Banknifty tried to exit the bearish hold but faced rejections. And unlike Nifty, BankNifty does not have a bearish channel — it has to fall a lot more to fit into one.
BankNifty Weekly Analysis
Between the last expiry and today BankNifty has fallen 406pts ~ 0.91%. Most importantly they got the closing right at the support/resistance zone of 44068.
BankNifty Daily Analysis
Today’s price action gave some boost to the option prices. You might have noticed almost all the OTM strikes had a swing range much higher than the closing price of yesterday. Imagine how a far OTM could have a higher pricing even when the markets are not moving against it.
The fall of 505pts ~ 1.14% between the HOD to the LOD made perfect sense, but the last 30mts pull back (encircled in blue) esp. by HDFCBK made no sense at all. The volumes were also amazing and looked like some weight rebalancing. This pull back of close to 180pts ensured banknifty is not technically in a bearish zone but a neutral one.
We did highlight the double top pattern formed on the 1hr chart yesterday, but its true impact is yet to be felt. Since BankNifty managed to close right at the support level of 44068, I dont wish to start the day tomorrow on the bearish side. First I need to get validation that the buying seen on HDFCBK was some positional or rebalancing one and not fresh longs. You definitely know by now how even HDFCBK single handedly can influence this index.
I wish to go with a neutral view tomorrow and wait for the market to give its next clue.