Banknifty’s (BNF) fall on Friday was much deeper as compared to Nifty
. BNF made a strong red candle with lower high, lower low and once breached the crucial 32000 level before recovering a bit and closed just above 32069. So it broke 1st January’s low and also touched 26th December’s low. In the process it broke 20 DEMA
(32,023) too but then recovered
and closed above it. So if the fall comes it seems that BNF will lead it. However, Nifty
was stronger and fell only by 55 points as compared to BNF’s 374 points. Please check my video posted on youtube under channel name Market Movers India for slightly more analytical content. As news unfolds, it seems this crisis will not be over soon and hence here onwards, every rise will ensure some profit booking. Option chain shows that there is not much PUT writing at 32000 strike even though total OI is highest, so I would not call it a strong support. On the other hand, there is impressive and identical Call writing on all strikes between 32200 & 32500. So there is ample resistance to BNF’s movement upwards. Out of 5 main constituent banks of Banknifty
, 2 banks ( HDFC
and Axis) closed below their 20 DEMAs. ICICI bank is just above it and Kotak is just above its 50 DEMA
. So, all are just above their important averages and going down. A small fall in any of these can aggravate BNF’s fall as a whole. There are no clear cut levels for shorting BNF so it will have to be done on the basis of movement in live market.
All the best. Happy trading.