PostMortem on BankNifty Today & Analysis of 06 JAN 2023
Today's 5mts TF shown below - when you look at the last 3 day's price action together, what forms is a continuous falling chart. Price line is moving similar to the EMAs in a 45 degree downward slope.
Is this technical? I dont think so, this has to be more fundamental based - thats why FIIs are continuing to sell - i think its the 10th day of selling now.
Are the bulls worried - absolutely not. Going by the options premium of PEs and CEs on bank nifty today - i did not see any panic. Bulls are expecting the current levels +500 or -500 to hold this week. Even when today's fall was nearing 2% the OTM PE premiums were not exploding, near money and upto 1500pts PE spiked (which is usual).
For bulls to be scared the next 500pts has to be taken out quickly which will create a small level of panic. How to know if there is panic - simply watch the OTM premium prices. When people run for cover - they square off at whatever prices available - this will explode the options premium.
Even though we had movement today, since the premiums did not explode - i did not take a trade today. I couldnt short PEs because the technicals shows the market will fall, I couldnt short the CEs because the premiums were relatively low.
---
15mts TF is showing clear bearish signal.
1hr TF will appear bearish if the recent swing low of 41600 support is taken out.
The bulls did hold the 41931 support quite well today. Like we discussed yesterday look at the depth of the candles formed near the SR bands & check for spike in volumes of the index components to guess the next move.
---
Of the bank nifty components, almost all of them had a similar looking graph. No major anomaly.
The last 2 hr pullback ensured
HDFCBANK
,
ICICIBANK
and
SBIN
cut their losses.
---
Indian equity market is a complicated institution but let me try to expose a common sense bubble set up in the making.
When the covid lockdown of 2020 was announced, most of the professionals lost their jobs, small & medium industries closed down. Govt. encouraged all to take collateral free bank loans. Of the SMEs that survived are doing more pathetically now. And people ploughed all their money to stock market as the indices were rising.
So an outsider looking at Indian stock markets & its outperformance may not know this fact. The back bone of India is made up not by the corporates, but by the SMEs, Kirana shops & small vendors.
If these people were forced to put their money into stocks because their mainline business was not doing well. Imagine what will happen if the stocks start crashing - the domino effect will be so strong that these people wouldnt know when to exit. End of the year they will have fewer funds with them and a lost business.
Somehow the situation is not reflecting this reality - but it may soon. I am hoping this never happens as it will create a mega depression.
Is this technical? I dont think so, this has to be more fundamental based - thats why FIIs are continuing to sell - i think its the 10th day of selling now.
Are the bulls worried - absolutely not. Going by the options premium of PEs and CEs on bank nifty today - i did not see any panic. Bulls are expecting the current levels +500 or -500 to hold this week. Even when today's fall was nearing 2% the OTM PE premiums were not exploding, near money and upto 1500pts PE spiked (which is usual).
For bulls to be scared the next 500pts has to be taken out quickly which will create a small level of panic. How to know if there is panic - simply watch the OTM premium prices. When people run for cover - they square off at whatever prices available - this will explode the options premium.
Even though we had movement today, since the premiums did not explode - i did not take a trade today. I couldnt short PEs because the technicals shows the market will fall, I couldnt short the CEs because the premiums were relatively low.
---
15mts TF is showing clear bearish signal.
1hr TF will appear bearish if the recent swing low of 41600 support is taken out.
The bulls did hold the 41931 support quite well today. Like we discussed yesterday look at the depth of the candles formed near the SR bands & check for spike in volumes of the index components to guess the next move.
---
Of the bank nifty components, almost all of them had a similar looking graph. No major anomaly.
The last 2 hr pullback ensured
HDFCBANK
,
ICICIBANK
and
SBIN
cut their losses. ---
Indian equity market is a complicated institution but let me try to expose a common sense bubble set up in the making.
When the covid lockdown of 2020 was announced, most of the professionals lost their jobs, small & medium industries closed down. Govt. encouraged all to take collateral free bank loans. Of the SMEs that survived are doing more pathetically now. And people ploughed all their money to stock market as the indices were rising.
So an outsider looking at Indian stock markets & its outperformance may not know this fact. The back bone of India is made up not by the corporates, but by the SMEs, Kirana shops & small vendors.
If these people were forced to put their money into stocks because their mainline business was not doing well. Imagine what will happen if the stocks start crashing - the domino effect will be so strong that these people wouldnt know when to exit. End of the year they will have fewer funds with them and a lost business.
Somehow the situation is not reflecting this reality - but it may soon. I am hoping this never happens as it will create a mega depression.
