7th Dec ’23 — Should I change my stance to neutral? — PostMortem on Nifty & BankNifty
Nifty Weekly Analysis
Between the last expiry and today, Nifty is up 845pts ~ 4.21%. It hit a new ATH this week and most importantly broke out from a tough resistance level. Although the main reason was due to the election results, Nifty had some fuel in it to take off. How the current week is going to pan out will be tricky — will Nifty continue upwards or take a pause?
Nifty Today’s Analysis
4mts chart link — click here
The opening candle was explosive, in line opening with a strong fall. See the depth in RED — you will understand from the chart. I was eagerly waiting for it to cross that 20850 level today but that did not happen. Let us try to analyze why we had such a bold opening candle move. Both BankNifty and NiftyIT had a similar opening, so it was not an isolated issue. Some players might have sold off their winners to go light into tomorrow’s RBI meet or it could be a long unwinding out of fear that the markets will fall today due to the US market handout.
From there Nifty climbed back to the 20920 level by 11.03 and then the trade was in a small range till the close. From 14.31 to 14.59. At 13.19, 20850 PE was trading at Rs1.95 when the spot was at 20911 — for me, it appeared damn cheap. Nifty made one more attempt — but it went nowhere.
63mts chart link — click here
The last 4 candles of today had perfect “open = close” values. 3 of them were perfect Dojis — look up the textbook for Doji candles, maybe the example quoted there won’t match with the real ones of today. Tomorrow’s RBI’s meeting @ 10.00 AM is going to be a decider — no level of technical analysis can predict when there is a news flow expected. I wish to maintain my long stance as of now although it’s itching to go neutral.
BankNifty Analysis
The opening candle was very similar to the Nifty’s. The low set in the opening minutes ended up as the low of the day. In a way, it shows the bulls are still in control. The pattern was quite similar to yesterday. Weak open and then range-bound trade.
4mts chart link — click here
Banks will be on their toes tomorrow huffing and puffing to the RBI Governor’s announcement. I feel he will bring in some measures to cut down the liquidity. The 2 last attempts by varying the iCRR and CAR did not go that well. Bank stocks reacted pretty badly but recovered and hit new highs.
Paytm fell 20% today when it said it might cut back on small value loans ~ Rs50000. I guess this impact came from the hike in CAR weightage from the last meeting.
63mts chart link — click here
I guess there is no clue from the chart here, will have to spend the time in front of the TV tomorrow to hear from the RBI governor directly. Since I am already neutral on BankNifty, my level to go short for tomorrow will be 46341.