4th Oct ’23 - HDFC spoils the expiry today- BankNifty PostMortem
BankNifty Weekly Analysis
Between the last expiry and today, BankNifty has only fallen 291pts. That fall coincides with a strong support level break - which may bring in additional pain for the long-only traders. It is also significant that BankNifty broke the crucial level ahead of Nifty reiterating its position as a leading indicator.
BankNifty Today’s Analysis
I was pretty much disappointed today with the BankNifty’s expiry. Not because I couldnt make any money out of it, but because the premiums were all good for nothing. Even after a 450+ points fall in the opening 10mts - the implied volatility did not move an inch.
Usually OTM premiums spike when BankNifty moves above 1% - but today there was absolutely nothing. 900 points lower strike 43000 PE was trading at Rs2 in the morning session. These are the premiums of strikes we see for 2000 to 2500 pts away from ATM. Most interestingly when BN was at 43880 levels by 12.30, 43500 PE was trading for Rs2.6. There is a solid reason why this happened and I will explain it in detail.
HDFC Bank is the main culprit. It went up 2.53% between open and 10.30. If you look at the daily candle - HDFC shows bearishness. Two strong double tops and then a lower high formation. The true free float weightage is 40.9% - source. Which means a small trigger could change the game.
Ideally, we should have had a strong down day. BankNify ended the day with cuts of 435pts ~ 0.98% - but due to the optimism on HDFCBK, the options premium were pricing in the information that further downside may be limited. The news broke today “HDFC Bank Q2 Update: Advances up 58% YoY, deposits rise 30%”.
On the 1hr TF we have broken the support of 44068, yesterday’s bearish call worked out well despite the misadventure from HDFC. I would like to see if BN can cross this resistance level in the forenoon session. I still maintain the bearish stance with the next target being 43827 and then 43732.
Between the last expiry and today, BankNifty has only fallen 291pts. That fall coincides with a strong support level break - which may bring in additional pain for the long-only traders. It is also significant that BankNifty broke the crucial level ahead of Nifty reiterating its position as a leading indicator.
BankNifty Today’s Analysis
I was pretty much disappointed today with the BankNifty’s expiry. Not because I couldnt make any money out of it, but because the premiums were all good for nothing. Even after a 450+ points fall in the opening 10mts - the implied volatility did not move an inch.
Usually OTM premiums spike when BankNifty moves above 1% - but today there was absolutely nothing. 900 points lower strike 43000 PE was trading at Rs2 in the morning session. These are the premiums of strikes we see for 2000 to 2500 pts away from ATM. Most interestingly when BN was at 43880 levels by 12.30, 43500 PE was trading for Rs2.6. There is a solid reason why this happened and I will explain it in detail.
HDFC Bank is the main culprit. It went up 2.53% between open and 10.30. If you look at the daily candle - HDFC shows bearishness. Two strong double tops and then a lower high formation. The true free float weightage is 40.9% - source. Which means a small trigger could change the game.
Ideally, we should have had a strong down day. BankNify ended the day with cuts of 435pts ~ 0.98% - but due to the optimism on HDFCBK, the options premium were pricing in the information that further downside may be limited. The news broke today “HDFC Bank Q2 Update: Advances up 58% YoY, deposits rise 30%”.
On the 1hr TF we have broken the support of 44068, yesterday’s bearish call worked out well despite the misadventure from HDFC. I would like to see if BN can cross this resistance level in the forenoon session. I still maintain the bearish stance with the next target being 43827 and then 43732.
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