6th Dec ’23 — Another Gap-up Opening — PostMortem on Nifty & BankNifty
Nifty Analysis
Recap from yesterday: “For tomorrow, I prefer to hold on to my long stance with 20690 as a reversal level. If the uptrend is intact — we hope to see the laggards also catch up with the winners shortly.”
5mts chart link — click here.
It might look like we had a lot of action today seeing the final gains at 82pts ~ 0.4%. The truth is — these gains came in the gap-up open itself. And from there, we haven’t moved an inch. The reason I drew a rectangle is to show you how range-bound today’s trade was, something that we usually see in choppy markets and not in trending markets.
There is nothing extraordinary to discuss on Nifty today, but we might have something to talk about on BankNifty and how it could influence the trend. Keep reading.
63mts chart link — click here
Notice how we went from sideways to vertical real quick? The surge of 1185pts came in just 6 to 7 days showing how relevant break-out trading is. As an analyst, it is very difficult to predict when the trend will end, but we need to keep looking. For tomorrow, I prefer to continue with the long bias unless we give up the 20853 in the morning session.
BankNifty Weekly Expiry Analysis
BN is up 2340pts ~ 5.26% between the last expiry and today. Unbelievable that BN gained these points in just 4 days, not quite sure if it is a new record or not. What this has done is give a big start to the December series. And we have already broken the ATH, the new value is 47259.85.
BankNifty Today Analysis
BankNifty also had a gap up open, but the first-hour price action did not seem normal. Not just because we went underwater and traded negative for the rest of the day, but the lack of will by the banks to move up. We all know the RBI MPC started the meeting today and we will have the summary on Friday @ 10.00 AM.
5mts chart link — click here
Seems like the market is expecting something from the RBI Governor this time. The last time he came up with a CAR (Capital Adequacy Ratio) weight increment — the markets fell. Prior to that, we had the I-CRR incremental cash reserve ratio of 10%. I guess he is doing everything to control the liquidity without raising the repo rates. What will he do this time — increase the weight on SLR (statutory liquidity ratio), ask banks to keep more collateral with RBI ?
The next move by Banks will make or break Nifty, that is because to continue the breakout strategy we need strong momentum. We cannot have a situation where Nifty rockets with the BankNifty stalling.
63mts chart link — click here
The first 63mts candle of today is encircled, see the weight its body carries. There was a drop of 482pts ~ 1.02%. So even though we hit a new ATH today, this candle looks worrisome. I wish to change my stance to neutral from bullish for tomorrow. We will get 100% clarity only by Friday on what RBI Governor has in mind, till then it is better to take only high-conviction trades.