12 Jul 2024 — Nifty up 190pts and BankNifty down 282pts this week + IT finds some momentum —…
Nifty Stance Bullish ⬆️
The stance on Nifty has remained bullish for many consecutive weeks, and it seems like there is nothing that can deter this powerful train. On a weekly basis we gained 190pts, we saw a minor weakness on 10th July but by the 3rd hour that day, we resumed the buying momentum.
The new ATH is now 24592, just shy of 24600 and this surge came today when NiftyIT swung close to 5% intraday. Quite ironically the IT component firms were rallying 6% or more when their CEO said, they arent sure if the firm was on a growth path.
From a trading perspective, there isnt anything to be done specifically. The premiums of close OTMs are so cheap that it is ill-advised to short them. Somehow this morning, I was tracking 24800 and at the premiums of Rs14, I felt it was too much undervalued. Once N50 picked up momentum, this strike rallied till 48 before closing at 23. I still think 23 is undervalued even after N50 moved up 186pts intraday. Probably it could be because we have a holiday in between.
My ratio spread algorithmic strategy is paying good dividends, each passing day — I am making finer adjustments to the re-entry and stop loss logic. The only disadvantage right now is that the direction of Nifty has to be chosen manually and if I get it right — the algo will close in the green, 100%. If the direction is long, I need to run the Call ratio spread, if the direction is bearish, I need to execute the Put ratio spread. If I get the direction wrong — then the losses are quite steep.
Weekly, we had another green week. The stance remains bullish till we get a red week. I am quite sure the bears are facing an existential crisis.
BankNifty Stance Neutral ➡️
Banks had a losing week this time, we fell -282pts ~ 0.54%. The fall was quite intense on the 11th of Jul when we hit a swing low of 51749, the beauty of that day’s price action is that we managed to close in green even after that selling rout.
This news broke out on 10th July — “RBI Raises Alarm Over Misuse Of Internal Accounts In Banks, Orders Closure”.
If the same news had broken in the US, the component banks would have been down at least 20% that day. We did not even fall 1% that day, interestingly a 16mts candle today at 10.51 managed to surpass the total points we fell on 10th.
The stance has been changed to neutral as we lost some bullish momentum. We never went bearish though, despite that news BN component stocks managed to do well to absorb the selling.
Interesting data points to watch out for next week would be
- The reaction to higher than expected inflation — 5.1% vs 4.75% last month.
- 2800 crore outflows in Quant MF in the last week plus the news of CFO quitting.
- The sudden surge in IT stocks has more legs or not.
Intraday Algos run via AlgoTest on Kotak
Webhooks automation run via TradingView on Dhan
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