PostMortem on BankNifty Today & Analysis of 09 DEC 2022
Today's price moves are quite interesting - Nifty50 ends the day with a loss of -0.61%, NiftyIT flash crashes at -3.14% but our hero Banknifty ends the day green +36.6pts. Such is the brute strength of the Banknifty bulls - really intense.
BN opens gap up at 43765 new ATH and then hits intraday high of 43853 by 10.05. A consolidation move from 10.10 to 12.00. Let me pull up the 3 charts of BankNifty, Nifty50 and NiftyIT to analyze today's move (see the yellow markers indicating the open & close of today)
The left most chart is bank nifty, the one in centre is Nifty and the right end chart is NiftyIT.
The major fall in Nifty50 and NiftyIT came from open to 12.50 see the chart below. BankNifty in the same period lost 0.55%, Nifty50 lost 1.09% and NiftyIT lost 3.40%.
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This will give a real solid idea on the strength shown by bank nifty today. From 12.05 to 12.50 BN made a strong dip, and then by 14.35 it had lost almost 400 pts (0.93%). In the same interval - Nifty50 lost 0.76% and NiftyIt lost 0.72% - indicating that the bulk of the fall of Nifty50 and NiftyIT came outside of the window wherein Banknifty tanked. There is a serious decoupling visible here eventhough BankNifty is a component of Nifty50.
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The closing hour was almost similar with BN climbing back 0.6%, Nifty50 0.44% and NiftyIT 0.45%. (see chart below).
If we compare these side by side and minute by minute we can notice a dichotomy in the bank nifty index vs the other 2. I am not sure how long this will continue - but lets enjoy till it lasts.
Today's fall was news driven, wherein one the IT major forecasted not so bright quarter earnings. Technically it impacts the IT sector - but if its a broad based recession warning, the biggest loser is going to be NiftyBank.
Thats because if people get laid off, companies run out of business - their loan repayments (debt repayments) will suffer putting on enormous pressure on banks. The NPAs will rise and many loan books will have to be written off.
Banks will be the last to fall and the last to recover - because its business is dependent on other business's success. One easy way to find if a bank is not doing well is to look at its deposit growth vs credit (loan) growth. If the deposits are not growing - its a bad sign. If the credit is growing above average - that too is a bad sign showing people are using debt to finance their expenses.
Factually i dont really bother if the indices are going up, down or flat - because i am not having an equity exposure as of now. My priority is to time the ups and down on a daily/hourly level so that it can benefit my trading.
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Of the banknifty components:
HDFCBk started in green and ended much more in green. The trend continuation from yesterday played out well
ICICI started flat and ended in red, but the last hour recovery ensured the losses are less
SBI started in green, went underwater and the last 45mts recovery was intense. closed near HOD
Axis was taking a breather following the previous day(s) rally. Final close was a bit in red
Kotak again had a big opening candle right from the 7th Dec close to the 8th Dec close. The chart pattern was bearish.
IndusInd went above the top formed on 6th Dec showing strength, and a brief pull back to the flat line. And a small recovery to close the day.
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15mts Vs 1hr TF - the support line is still intact assuring its too early to look for bearish signs.
When the support line falls in the 1hr TF we will try going short. This will only plan out if the other indices are also dipping.
BN opens gap up at 43765 new ATH and then hits intraday high of 43853 by 10.05. A consolidation move from 10.10 to 12.00. Let me pull up the 3 charts of BankNifty, Nifty50 and NiftyIT to analyze today's move (see the yellow markers indicating the open & close of today)
The left most chart is bank nifty, the one in centre is Nifty and the right end chart is NiftyIT.
The major fall in Nifty50 and NiftyIT came from open to 12.50 see the chart below. BankNifty in the same period lost 0.55%, Nifty50 lost 1.09% and NiftyIT lost 3.40%.
---
This will give a real solid idea on the strength shown by bank nifty today. From 12.05 to 12.50 BN made a strong dip, and then by 14.35 it had lost almost 400 pts (0.93%). In the same interval - Nifty50 lost 0.76% and NiftyIt lost 0.72% - indicating that the bulk of the fall of Nifty50 and NiftyIT came outside of the window wherein Banknifty tanked. There is a serious decoupling visible here eventhough BankNifty is a component of Nifty50.
---
The closing hour was almost similar with BN climbing back 0.6%, Nifty50 0.44% and NiftyIT 0.45%. (see chart below).
If we compare these side by side and minute by minute we can notice a dichotomy in the bank nifty index vs the other 2. I am not sure how long this will continue - but lets enjoy till it lasts.
Today's fall was news driven, wherein one the IT major forecasted not so bright quarter earnings. Technically it impacts the IT sector - but if its a broad based recession warning, the biggest loser is going to be NiftyBank.
Thats because if people get laid off, companies run out of business - their loan repayments (debt repayments) will suffer putting on enormous pressure on banks. The NPAs will rise and many loan books will have to be written off.
Banks will be the last to fall and the last to recover - because its business is dependent on other business's success. One easy way to find if a bank is not doing well is to look at its deposit growth vs credit (loan) growth. If the deposits are not growing - its a bad sign. If the credit is growing above average - that too is a bad sign showing people are using debt to finance their expenses.
Factually i dont really bother if the indices are going up, down or flat - because i am not having an equity exposure as of now. My priority is to time the ups and down on a daily/hourly level so that it can benefit my trading.
---
Of the banknifty components:
HDFCBk started in green and ended much more in green. The trend continuation from yesterday played out well
ICICI started flat and ended in red, but the last hour recovery ensured the losses are less
SBI started in green, went underwater and the last 45mts recovery was intense. closed near HOD
Axis was taking a breather following the previous day(s) rally. Final close was a bit in red
Kotak again had a big opening candle right from the 7th Dec close to the 8th Dec close. The chart pattern was bearish.
IndusInd went above the top formed on 6th Dec showing strength, and a brief pull back to the flat line. And a small recovery to close the day.
---
15mts Vs 1hr TF - the support line is still intact assuring its too early to look for bearish signs.
When the support line falls in the 1hr TF we will try going short. This will only plan out if the other indices are also dipping.
