PostMortem on BankNifty Today & Analysis of 27 JAN 2023
There were 4 support & resistance zones in play today, 3 supports broken & 1 held. No pull back rally - just a consolation flat type trading last 3hrs today.
Lets analyze it one by one. The accusations against Adani group companies by Hindenburg research caught the lime light today, markets reacting more seriously than on 25th Jan.
Many of the Adani group companies were at lower circuit breaker today - insane amount of wealth wiped out. People dont talk when stocks rally 1000%, but if it falls 20% - rumors spread quite fast.
Now why are the banks falling? Thats because the vehicle Adani has used to build the empire is loans & credit - bank loans & loans by pledging the equity. So if the equity falls considerably lower - banks will have to issue a margin call. There is every chance that their loans will go above the collateral price making it easy for the group to default & walk away. I am not saying that will happen - but its how the investors think.
For the evangelists - its time to add onto more adani stocks as good valuations may be hit over the next month. Disclosure: I dont have interest to buy/sell or trade adani stocks or FnO. But i am intersted to analyze how banks will react - because banking is my domain.
BANKNIFTY
opened gap down at 41312 breaking support 1, fell 2.26% ~ 940 points by 09.30 breaking support 2, then 2 green candles and then the 2nd leg of fall of 1.02% ~ 418pts between 09.40 to 10.10 to break support 3.
A retracement to previous support level till 10.35 & then the 3rd leg of fall of 1.75% ~ 715pts till 12.35 which came close to the support 4 but did not break it. From 12.35 to close of day there was no more meaningful price action. Support level was tested at 14.10 but it held. Notably there was no retracement in this period - indicating a change in sentiment for the bulls.
Since the scale is logarithmic the intensity of the fall is not visible, but we ended the day with a loss of 3.13% ~ 1302pts. Never in the recent history have we had a 3% fall.
we did discuss on the possibility of the 2nd leg for the price action that started on Dec14th - that prophecy is playing out now - let me show that to you in the 1hr chart
See the light blue line i have drawn, the 1st leg starts at dec 14th to 23rd. Then a lower high formation till 4th Jan. Then a range bound trade till 23rd Jan. And the support break ensuring we will have a new lower low.
Now most of the analysts would have turned bearish - our merit is to find it early & take the trade - even though it turns out wrong, we can still manage.
15mts TF also screaming with bearishness. But note that there are 18 more strong support levels to break if we have to go below the 17th June 2022 levels of 32290 - so relax till then !
to view the 4 charts discussed today visit viswaram . com
Lets analyze it one by one. The accusations against Adani group companies by Hindenburg research caught the lime light today, markets reacting more seriously than on 25th Jan.
Many of the Adani group companies were at lower circuit breaker today - insane amount of wealth wiped out. People dont talk when stocks rally 1000%, but if it falls 20% - rumors spread quite fast.
Now why are the banks falling? Thats because the vehicle Adani has used to build the empire is loans & credit - bank loans & loans by pledging the equity. So if the equity falls considerably lower - banks will have to issue a margin call. There is every chance that their loans will go above the collateral price making it easy for the group to default & walk away. I am not saying that will happen - but its how the investors think.
For the evangelists - its time to add onto more adani stocks as good valuations may be hit over the next month. Disclosure: I dont have interest to buy/sell or trade adani stocks or FnO. But i am intersted to analyze how banks will react - because banking is my domain.
BANKNIFTY
opened gap down at 41312 breaking support 1, fell 2.26% ~ 940 points by 09.30 breaking support 2, then 2 green candles and then the 2nd leg of fall of 1.02% ~ 418pts between 09.40 to 10.10 to break support 3. A retracement to previous support level till 10.35 & then the 3rd leg of fall of 1.75% ~ 715pts till 12.35 which came close to the support 4 but did not break it. From 12.35 to close of day there was no more meaningful price action. Support level was tested at 14.10 but it held. Notably there was no retracement in this period - indicating a change in sentiment for the bulls.
Since the scale is logarithmic the intensity of the fall is not visible, but we ended the day with a loss of 3.13% ~ 1302pts. Never in the recent history have we had a 3% fall.
we did discuss on the possibility of the 2nd leg for the price action that started on Dec14th - that prophecy is playing out now - let me show that to you in the 1hr chart
See the light blue line i have drawn, the 1st leg starts at dec 14th to 23rd. Then a lower high formation till 4th Jan. Then a range bound trade till 23rd Jan. And the support break ensuring we will have a new lower low.
Now most of the analysts would have turned bearish - our merit is to find it early & take the trade - even though it turns out wrong, we can still manage.
15mts TF also screaming with bearishness. But note that there are 18 more strong support levels to break if we have to go below the 17th June 2022 levels of 32290 - so relax till then !
to view the 4 charts discussed today visit viswaram . com
