PostMortem on BankNifty Today & Analysis of 11 NOV 2022
What a spirited performance by
BANKNIFTY
today! Mega gap up opening at 42163 breaking the all time highs and a perfectly strong buy day today. The attempt to close the gap was short-lived when BN took support at 41929 (The swing high of the last few sessions).
This was quite expected after the mega US rally yesterday,
SPX
up 5.5%,
NDX
up 7.49%.
Here bank nifty was already at ATH so this overnight news really helped the
CNXIT
index more (up 3.81% today).
I have been covering this story for a while now, the expiry trades are at isolation mostly due to positioning and the adjacent days has continuous price action. Let me be very specific here with examples
From image below, see the blue encircled portion which is what happened in expiry yesterday. The entire day was in isolation - the day today had no significance to the trades done yesterday.
The pink highlight shows how the bank nifty would have continued if there was no expiry positioning. Remember i said this expiry bank nifty will be bearish - it was because of this see orange highlight.
The last 1 hour move on wednesday showed us indications that thursday will be bearish. But this had no significance in the overall trend direction. What this does is create an imbalance of information - which leaves a hole in the pocket for traders who cannot digest it.
---
Of the bank nifty components we have few anomalies today - lets try analyzing them one by one
HDFCBANK
up 5.67% mostly because of the MSCI rebalancing news. The gap up was soft, the news drove the stock up.
ICICIBANK
down only -0.46% but the chart pattern of icici vs hdfc shows a mirror like image. The gap up was huge and the fall was rhyming with the hdfc news.
SBIN
also had similar chart patern as icici - mega gap up and a gradual fall to close lower. Both SBI and ICICI would have been unwound to stabilize the bank nifty index when hdfcbk was getting accumulated. Again the institutions would have done this keeping their MTM losses under check
If yes - then we can expect a counter move in the next 3 sessions prior to this expiry. Or else the big boys will have to take their losses and move forward.
The fall in
KOTAKBANK
came after 11.00 only, the intensity of fall was strong - may be the strong hands would have booked profits after the move yesterday.
Axis bank gave confusing chart pattern today - jumping up and down after the gap up. The chart isnt bearish today - but i cannot say its bullish also.
IndusInd bank closed positive even after a gradual fall.
---
If you look that the chart today, the 9.20 straddlers would have made money. the open and close exactly at the same levels. As 80% of the last 2 months move were in the same fashion.
Macros overnight creates gap up or gap down and then the trade for the day happens as the same level. Even for a day like today where hdfc bank had news flow and it rallied 6% - the market participants fought hard to keep the open and close in the range by offloading ICICI, SBI, Kotak.
Now is not the time for the faint of heart to do options trading - the people who make money are either the news makers or the insiders.
Far OTM PE options would have given good naked selling opportunities today. Look at the intraday highs, previous day close and the final close of todays.
Here again algos and HFTs would have identified these mispricings before you or me did.
---
S&P500 vs bank nifty the spread has closed down a little due to the extra special move yesterday.
SPX down -12.16% vs Bank nifty +6.65%. Lets note that US market had a bear rally bounce vs a bull run in India.
After yesterday's move, the nearest support is at 3945.86 and resistance at 3991.18. Also note yesterday's move took out the long red candle as of 02 nov 14.30.
Nobody can predict, but the bounce we had in US market was because the trades felt the CPI news will prompt US FED to pivot and start doing the QE from the QT now.
Guess what will happen if the FED says they are not pivoting?
---
15mts vs 1hr TF bank nifty - both are showing immense bullishness. Notice today's trade staying on top of the swing high of the last sessions - indicating strength.
1D vs 1W also showing strong bullishness. The day's candle is a break away red doji much like a shooting star. But the week's candle is strong green with a long bottom wick.
---
Bank nifty support and resistance has been updated
new support1: 41929, support2: 41618
resistance: no resistance as at ATH
---
PS: Read the standard disclaimer at: bit. ly/3Nm3RER
BANKNIFTY
today! Mega gap up opening at 42163 breaking the all time highs and a perfectly strong buy day today. The attempt to close the gap was short-lived when BN took support at 41929 (The swing high of the last few sessions). This was quite expected after the mega US rally yesterday,
SPX
up 5.5%,
NDX
up 7.49%. Here bank nifty was already at ATH so this overnight news really helped the
CNXIT
index more (up 3.81% today). I have been covering this story for a while now, the expiry trades are at isolation mostly due to positioning and the adjacent days has continuous price action. Let me be very specific here with examples
From image below, see the blue encircled portion which is what happened in expiry yesterday. The entire day was in isolation - the day today had no significance to the trades done yesterday.
The pink highlight shows how the bank nifty would have continued if there was no expiry positioning. Remember i said this expiry bank nifty will be bearish - it was because of this see orange highlight.
The last 1 hour move on wednesday showed us indications that thursday will be bearish. But this had no significance in the overall trend direction. What this does is create an imbalance of information - which leaves a hole in the pocket for traders who cannot digest it.
---
Of the bank nifty components we have few anomalies today - lets try analyzing them one by one
HDFCBANK
up 5.67% mostly because of the MSCI rebalancing news. The gap up was soft, the news drove the stock up.
ICICIBANK
down only -0.46% but the chart pattern of icici vs hdfc shows a mirror like image. The gap up was huge and the fall was rhyming with the hdfc news.
SBIN
also had similar chart patern as icici - mega gap up and a gradual fall to close lower. Both SBI and ICICI would have been unwound to stabilize the bank nifty index when hdfcbk was getting accumulated. Again the institutions would have done this keeping their MTM losses under check If yes - then we can expect a counter move in the next 3 sessions prior to this expiry. Or else the big boys will have to take their losses and move forward.
The fall in
KOTAKBANK
came after 11.00 only, the intensity of fall was strong - may be the strong hands would have booked profits after the move yesterday. Axis bank gave confusing chart pattern today - jumping up and down after the gap up. The chart isnt bearish today - but i cannot say its bullish also.
IndusInd bank closed positive even after a gradual fall.
---
If you look that the chart today, the 9.20 straddlers would have made money. the open and close exactly at the same levels. As 80% of the last 2 months move were in the same fashion.
Macros overnight creates gap up or gap down and then the trade for the day happens as the same level. Even for a day like today where hdfc bank had news flow and it rallied 6% - the market participants fought hard to keep the open and close in the range by offloading ICICI, SBI, Kotak.
Now is not the time for the faint of heart to do options trading - the people who make money are either the news makers or the insiders.
Far OTM PE options would have given good naked selling opportunities today. Look at the intraday highs, previous day close and the final close of todays.
Here again algos and HFTs would have identified these mispricings before you or me did.
---
S&P500 vs bank nifty the spread has closed down a little due to the extra special move yesterday.
SPX down -12.16% vs Bank nifty +6.65%. Lets note that US market had a bear rally bounce vs a bull run in India.
After yesterday's move, the nearest support is at 3945.86 and resistance at 3991.18. Also note yesterday's move took out the long red candle as of 02 nov 14.30.
Nobody can predict, but the bounce we had in US market was because the trades felt the CPI news will prompt US FED to pivot and start doing the QE from the QT now.
Guess what will happen if the FED says they are not pivoting?
---
15mts vs 1hr TF bank nifty - both are showing immense bullishness. Notice today's trade staying on top of the swing high of the last sessions - indicating strength.
1D vs 1W also showing strong bullishness. The day's candle is a break away red doji much like a shooting star. But the week's candle is strong green with a long bottom wick.
---
Bank nifty support and resistance has been updated
new support1: 41929, support2: 41618
resistance: no resistance as at ATH
---
PS: Read the standard disclaimer at: bit. ly/3Nm3RER
