13th Dec ’23 — Stance change to neutral worked perfectly — PostMortem on Nifty & BankNifty
Nifty Analysis
4mts chart link — click here
Nifty does a classic U-turn today, around the 20770 levels. For a moment I thought the neutral stance was not working and we would have to go into bearish mode. A small pullback was expected, but a 180pts mammoth reversal was not there in my mind. From a headline perspective, we closed flat today, which means neutral stance continues for tomorrow.
4mts chart link — click here
Both BankNifty and NiftyIT orchestrated the U-turn. NiftyIT fell 781pts ~ 2.33% intraday to a session low of 32715 and then recovered 390pts ~ 1.19%. What this recovery did to Nifty was to shoot the bearish hopes in the leg. No matter what happens, the bulls are not giving room for the bears to breathe. The dip buying is so intense that I kind of feel its frothy.
63mts chart link — click here
Nifty is still above the ascending channel, the bulls are still in control. All eyes will be on the FOMC meeting by FED. Any hints of not cutting the interest rates in 2024 may spook the US markets. We have the Nifty expiry tomorrow and as it stands the OTM premiums are pretty low indicating the option sellers are not expecting a big more tomorrow. In case we pick a direction tomorrow, the short sellers (PE or CE) will have to run for cover and that could spike the option premiums. I am going with a neutral stance for tomorrow also and wish to go bullish above 21037 and bearish below 20702.
BankNifty Weekly Expiry Analysis
Between the last expiry and today, Banknifty has only managed to gain 287pts ~ 0.61% even though the chart says a different story. We hit a new ATH this week @ 47588. The weekly trend is looking positive with the momentum favoring the bulls.
BankNifty Today’s Analysis
The opening candle in Banknifty had a swing range of 189pts ~ 0.4%. That candle looked dangerous and I really thought we would have a deep RED day today. Quite interestingly, BN made a W pattern right at the top band of the ascending channel (see the 63mts chart link also).
4mts chart link — click here
Once BN got caught in that channel envelope, it was blindly following that path. The final close is at -0.01% — it cannot get more flat than this. The W pattern may change the dynamics for tomorrow — usually, it favors the bulls. So we need to wait and watch for the first hour or so tomorrow and then decide.
From an expiry trading perspective, the OTM options really did not have any premium to start with. The opening moves gave some rush and then the reversal by 12.31 also gave some boost to the strikes.
63mts chart link — click here
BankNifty has entered the ascending channel and from a medium-term perspective, it all looks bullish to me. For tomorrow, I wish to start with the neutral stance and then change course as the price action develops. Falling below 46565 is bearish to me.
· Free charts made with ❤️ on TradingView
Read my latest book: 63 PostMortems on Nifty50 — Q2 FY2023–24 — click here