5th Oct ’23 - Bearish despite gap-up - PostMortem BankNifty
BankNifty Analysis
BankNifty had a similar chart pattern as that of Nifty. An opening gap-up of 272pts ~ 0.6% and then a 2nd leg of rally from 10.30 of 279pts ~ 0.63%. The only difference I saw was that after the day’s high was hit - BankNifty started falling gradually whereas Nifty went flat.
Tomorrow’s RBI MPC outcome at 10.00 might be interesting. We would like to see how RBI governor is planning to suck the liquidity out. The I-CRR implementation and then its withdrawal created a ruckus last time. Markets fell first and then recovered equally. If the liquidity is left unchecked - the costs of goods & services will keep getting inflated. Unlike other developed countries - we do not want to hurt the growth and the growth in inflation is not hurting us that badly.
I do not wish to change my bearish stance on BankNifty despite an up day today. The M pattern at 44650 levels are looking quite strong for me and until BankNifty takes them out - I do not even plan to go neutral as well. The biggest enemy of the bears is the implied volatility - the options premiums are not expecting a massive move this week even though we have an RBI event. Option sellers are having a tough time these days - I still think it's much better not to trade than sell strikes cheaply.
BankNifty had a similar chart pattern as that of Nifty. An opening gap-up of 272pts ~ 0.6% and then a 2nd leg of rally from 10.30 of 279pts ~ 0.63%. The only difference I saw was that after the day’s high was hit - BankNifty started falling gradually whereas Nifty went flat.
Tomorrow’s RBI MPC outcome at 10.00 might be interesting. We would like to see how RBI governor is planning to suck the liquidity out. The I-CRR implementation and then its withdrawal created a ruckus last time. Markets fell first and then recovered equally. If the liquidity is left unchecked - the costs of goods & services will keep getting inflated. Unlike other developed countries - we do not want to hurt the growth and the growth in inflation is not hurting us that badly.
I do not wish to change my bearish stance on BankNifty despite an up day today. The M pattern at 44650 levels are looking quite strong for me and until BankNifty takes them out - I do not even plan to go neutral as well. The biggest enemy of the bears is the implied volatility - the options premiums are not expecting a massive move this week even though we have an RBI event. Option sellers are having a tough time these days - I still think it's much better not to trade than sell strikes cheaply.
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