PostMortem on BankNifty Today & Analysis of 16 MAY 2023 Finnifty
There was a fall of 306pts ~ 0.7% between 14.40 to 15.20, even then banknifty does not appear as negative as Nifty50 after today's session.
The options traded on banknifty CE side was really commendable, but nothing like Nifty50 CE strikes. In the same comparison period N50 only fell 0.61% but the preceding price action is what makes it more bearish than BN.
Last 2 to 3 days we have been discussing the unique situation where BN is hovering around ATH and N50 is below by 3 to 4%, ideally one should expect N50 to catch up and BN to stay flat - but the price action we had last 2 days shows N50 bearish and BN flattish.
The options trader has more volatility available in N50 than BN and with the lower margin requirements N50 trading is generally more profitable & safer these days.
Just look at how the far OTMs are getting traded, 8 digits volume. Near ATM is having 9 digit volume.
After seeing the N50 bearishness, I was also expecting banknifty to fall more than 1% - but it did not. This divergence cannot really last long, and if banknifty starts falling - we can fairly assume the implied volatility to shoot up. This will help many option traders switch back to BN esp on expiry day.
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15mts has formed a rounded top like formation, if the 1st support level of 43253 is getting taken out tomorrow - then we can prepare for some bearish moves ahead. Until the support is breached, banknifty bulls will not give up
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1hr TF is not looking bearish at all, its in fact in a perfect bullish trajectory. Now for the longer term trend to stay intact - all the components has to aid the bullish momentum. Its practically impossible for BN to keep outperforming N50 - remember BN is a subset of N50, N50 is the bigger index.
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Finnifty Expiry
Finnifty was looking quite negative right from the start, it may be because HDFC and HDFC had a poor start. Bajaj twins were counter balancing the fall in HDFC twins to keep the finnifty index from crashing.
From an expiry perspective, even after a 0.74% ~ 144pts fall today, the support level of 19415 was not breached. This has to be taken positively to an extent, but the price action shows further bearishness. Remember we just hit a new all time high yesterday - 19631.85.
The options traded on banknifty CE side was really commendable, but nothing like Nifty50 CE strikes. In the same comparison period N50 only fell 0.61% but the preceding price action is what makes it more bearish than BN.
Last 2 to 3 days we have been discussing the unique situation where BN is hovering around ATH and N50 is below by 3 to 4%, ideally one should expect N50 to catch up and BN to stay flat - but the price action we had last 2 days shows N50 bearish and BN flattish.
The options trader has more volatility available in N50 than BN and with the lower margin requirements N50 trading is generally more profitable & safer these days.
Just look at how the far OTMs are getting traded, 8 digits volume. Near ATM is having 9 digit volume.
After seeing the N50 bearishness, I was also expecting banknifty to fall more than 1% - but it did not. This divergence cannot really last long, and if banknifty starts falling - we can fairly assume the implied volatility to shoot up. This will help many option traders switch back to BN esp on expiry day.
---
15mts has formed a rounded top like formation, if the 1st support level of 43253 is getting taken out tomorrow - then we can prepare for some bearish moves ahead. Until the support is breached, banknifty bulls will not give up
---
1hr TF is not looking bearish at all, its in fact in a perfect bullish trajectory. Now for the longer term trend to stay intact - all the components has to aid the bullish momentum. Its practically impossible for BN to keep outperforming N50 - remember BN is a subset of N50, N50 is the bigger index.
---
Finnifty Expiry
Finnifty was looking quite negative right from the start, it may be because HDFC and HDFC had a poor start. Bajaj twins were counter balancing the fall in HDFC twins to keep the finnifty index from crashing.
From an expiry perspective, even after a 0.74% ~ 144pts fall today, the support level of 19415 was not breached. This has to be taken positively to an extent, but the price action shows further bearishness. Remember we just hit a new all time high yesterday - 19631.85.
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