02 Jan ’24 — A Breakdown in Progress? — Nifty & BankNifty PostMortem Analysis
Nifty Analysis — Stance: Neutral ➡️
Recap from yesterday: “The last candle is looking quite deep and has almost negated the progress of 3 days. If it was not related to any news/event, the outcomes match quite strongly for an interim top-like formation.”
4mts chart link — click here
The last 30mts action yesterday was not a blip, we got some continuity today. Nifty50 fell 199pts ~ 0.92% intraday to 21555 by 10.39 and then retraced 50% of that fall. The real impact was on BankNifty and not Nifty. Just like we often say, during trend reversals — BankNifty takes the lead and then Nifty50 follows. We did change the stance on BankNifty to bearish today (more on that in a while).
Even NiftyIT took some beating today, the positive contributors to Nifty50 were BAJFINANCE, RELIANCE, and ADANIPORTS. In fact, BAJFINANCE was the main reason FinNifty and BankNifty had a variance of 0.46% today.
63mts chart link — click here
We would like to maintain the stance on Nifty to neutral itself. The first target for a trend change will be the breach of the ascending channel top line approx 21530 levels. From a technical analysis perspective, we had the 3 black crows at 14.30 yesterday and the first 2 candles today. The last time we had a breakdown i.e. on 20th Dec, Nifty50 took support at the channel top line — so we must breach that now for extra confirmation.
BankNifty Analysis — Stance Bearish ⬇️
All checkboxes ticked for a bearish trend reversal. Firstly, we got confirmation when we breached the ascending channel bottom line. Secondly, there was no attempt to retrace once we started falling. The low of the day was hit towards the end of session.
4mts chart link — click here
BankNifty has been the torchbearer for the trend reversals. Of late we were worried that the baton may be passed on to NiftyIT. The leader earlier and now is still BankNifty — today’s move was quite indicative of that. If it goes as per the script, we should be seeing further followthrough by Nifty & FinNifty tomorrow.
63mts chart link — click here
The last time we tried to breach the channel bottom line was on 21st Dec. It ended up as a trap for the bears. This time around, we have 6 candles created below the bottom line, and 5 of them in RED. Hope is not a keyword, but the bears have to cling to something to create momentum. We have anyway revised the stance to bearish with the first target being 47462 followed by 46939.