10th Oct ’23 — India sends 5 white soldiers to the war — PostMortem on Nifty & BankNifty
Nifty Analysis
Nifty does a gap-up open today and then rallies a total of 109pts in the opening candle w.r.t previous day’s close. This also ensures that yesterday’s swing high is not broken on the downside from the 2nd candle onwards. Till 11.35 Nifty showed no special signs of directional movement but once the 19620 levels were broken — it started climbing ferociously. Can you believe we shot up another 106pts ~ 0.54% to negate yesterday’s price action as well as take out the swing high of 6th October.
Yesterday looked like a blip, remember our Friday’s plan — “Go long”. We are there now. What these 2 days did was to take out my stop losses both ways. My long stop loss was taken out yesterday and the short stop loss was taken out today.
On the hourly chart — India replies with 5 white soldiers to the war news (3 white soldiers means 3 strong green candles). We have not taken out the 19776 resistance so far — but we are pretty close. I wish to change my stance from neutral to bullish with the first target of 19776 and the 2nd target of 19847. In case we lose the momentum tomorrow — we will still be range-bound unless the bottom support is broken.
BankNifty Analysis
The real reason for the rally on Nifty was BankNifty. Remember yesterday we discussed how it fell below the support of 44068 and then had an intraday rejection. We also went with a bearish view for today.
The first thing the gap-up and the swing of 1st candle did was to breach the resistance. A +268pts ~ 0.61% open was more than adequate. Then till 11.55 — BankNifty was spiceless — no intent to move in either way. Then from 12.00 to 13.40 — we had pure magic. A rally of 407pts ~ 0.92% to break away from the support in style.
We also came pretty close to taking out the swing high of 6th October — but the last 2 hours saw some profit-taking. BankNifty at its best — the options premium also started swinging in a wider range expecting more firepower.
On the 1hr candle, we are out of bearishness but I am not bullish yet. Yes, today’s price action gives it a lot of momentum — but we need to retest the 44628 to 44731 levels and break it for bullish momentum to spike. I wish to change my stance from bearish to neutral till we get more clarity. Since we have the weekly expiry tomorrow — I hope the options premium will jump just like we did today, otherwise the options selling will not bring good bang for the buck.
I am dropping coverage for FinNifty as its premiums are not attractive enough for options strategy deployments. I will definitely consider trading it on expiry days if the zing in premium returns.