03 Aug ’23 Post Mortem on Nifty & BankNifty | Weekly Expiry Analysis | Trend continuation in cards?
Nifty Weekly Analysis
We lost 373pts ~ 1.89% between the last expiry day and today. Usually Nifty ends up compensating the loss by dip-buying. For the first time in many weeks — the dip buying is not that intense and that may open up more cuts in the coming weeks.
Our stock market in specific has been in an unchecked rally from April 2023. The fact that US markets went up due to the FOMO in Artificial Intelligence stocks should in no way influence Indian stock markets, but it did. At present in the listed space — there are no real big AI names here, yet almost all the sectors participated in a long-only rally with no healthy pullbacks.
Nifty Daily Analysis
I am so much relieved today not just because yesterday’s short call worked, but for the first time in many sessions we had Nifty following price action towards downside. Every other instance the dip buyer would come in at 2.30pm and close Nifty higher — negating any selling pressure.
The manner in which we broke the 19400 level was impressive, the selling momentum ensured we went down till 19296 before bouncing back. The high to low fall was 239pts ~ 1.23% and the pullback was 101pts ~ 0.53%.
From a technical analysis standpoint, nifty respecting the downward trend price action will give so much of an encouragement to the bears. These bears were beaten to pulp in the last 4 months — so it is the right time for payback!
As long as the trend line is getting respected and the EMAs are not crossing over — we remain bearish. The momentum should pick up once the 19200 level is getting broken as there is unfinished business.
BankNifty Weekly Analysis
Banknifty has fallen an impressive 3.18% compared to just 1.89% of Nifty. The major reason for that is
- Banknifty always acts as leading indicator in a trend change
- NiftyIT and Reliance were supporting Nifty in the last week.
Once the US market started falling due to the Fitch rating downgrade, NiftyIT started correcting which ensured Nifty’s breakdown. Now why BankNifty chart pattern screamed a bearish opportunity before Nifty — I really dont know. The price action of 27th Jul was very strange and unusual.
BankNifty Daily Analysis
Today’s price action was in perfect harmony with yesterday’s. The ease with which the chart pattern could be plotted was as simple as going short in today’s expiry. The day started pretty ordinary for OTM options, but after 10.00 the premiums started jumping indicating a market trending opportunity.
The real move came only after 11.30 wherein we dropped 591pts ~ 1.32% till 14.10. Overall we fell 754pts from High to low of which ~80% came after 11.30. There was also a decent recovery of 325pts ~ 0.73% in the last 1hr 20mts.
The final close of just 1.07% ~ 482pts loss is not a deal breaker at all. Basically the market participants are still euphoric and the fear level is absolutely near zero. The VIX falling today even after a 6% surge intraday is proof. For push down of prices — we would need more intense selling on HDFCBK, ICICIBK, SBIN, AXISBANK which has a decent FII exposure and has seen a one-way rally.
The double top pattern from yesterday has now changed into a head and shoulders further reconfirming our short side possibilities. Until proven wrong, we prefer to go short.
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