prathamaggarwal
Education

BANK NIFTY - TIME UP!!!

NSE:BANKNIFTY   NIFTY BANK
Hey Bank Nifty , TIMES UP!

Q3 2018 has been a roller coaster ride. It has been extremely cold for the traders and rather an Autumn for investors. It has given hard time to most of us. We witnessed a drastic fall but it was a rather swift recovery which made to curious to study and analyse the numbers. I made 2 observations.

1. Nifty is 1000 Points away (Nearly 10%) from all its all time High.
2. Bank Nifty is 850 Points away (Only 3.5%) from all its all time High.


Even after such drastic fall, Market especially Bank Nifty has recovered swiftly. Seeing at the numbers, one can clearly remark that Bank Nifty has outperformed Nifty by a while. But the question is how?

1. IL & FS issue resulted in the the blood part of Indian market. IL&FS defaulted on payment of loans installment which led to a panic among investors. NBFCs and Banks had major exposure of ILFS which resulted in Financial Shares. As a result financial shares started falling and this affected the entire market.

So what really lead to this rather swift recovery?

2. While there are no major developments on the IL&FS issue,there might come a counter answer that major private banks contributing highest percentages to Bank Nifty had a minimal exposure to IL&FS and thus, their recovery lead to recovery in Bank Nifty . However, let’s not forget few major points

a. Out of the total Debt of IL&FS of 91000 crore, 57000 crore what taken from banks. Which is more than 60%.
b. NBFCs take loan from banks, such big defaults has the power to shake the foundation of NBFCs, who in turn if start defaulting Bank’s money, there will come a crisis.
c. Or on a lighter note, it directly affects their loan taking capacity of such NBFCs and thus effects banks does any such default affects industry as a whole

While this is not enough, there are more reasons for Financial Shares to perform badly

3. The Resignation of our RBI Governor, Mr. Urjit Patel. This is the second time in the past 5 years that RBI Governor has resigned in the mid of his term. Mr. Rajan was the first one. It clearly depicts the instability among the office bearers of the Largest Financial Body.

4. Global market has been bleeding, specially Asian markets have performed drastically bad. We have even witnessed a lower circuit in one of our neighbor Asian market. Even Dow Jones have fallen like never before. It has witnessed the highest one day fall in the past days. Trade war has further worsen the situation?

5. Our Elected Government BJP has started losing its control and lost 2 major elections in December 18. Political Instability is seen in a bad light which is not good for the market.

SO NOW THE SAME QUESTION AND SAME NUMBERS

1. Nifty is 1000 Points away (Nearly 10%) from all its all time High.
2. Bank Nifty is 850 Points away (Only 3.5%) from all its all time High.


But the question is how? So what really lead to this rather swift recovery?


On the technical front :


1. Bank Nifty is approaching its Trendline resistance
2. FIBO resistance ahead (starting from where the recovery started)
3. It is near its prior reversal point
4. Negative divergence in RSI

Also, a reversal pattern H&S is in formation. HEAD & SHOULDER can turn the table upside down for the bulls. So just be careful!

Thanks. Hope my analysis help.

While resistances are meant to be broken. Still owing to the above facts, I am a bit negative of Bank Nifty and think there might come a big fall in the coming days and this rise might turn out to be a bluff.

PS : I may be wrong. All counter opinions looking for fruitful discussion are welcomed. If Warren Buffet says he is still learning, who are we to say we know it all.
Comment: Correction 1:
1. IL & FS issue resulted in the the blood part of Indian market. IL&FS defaulted on payment of loans installment which led to a panic among investors. NBFCs and Banks had major exposure of ILFS & As a result financial shares started falling and this affected the entire market.

Correction 2:
c. Or on a lighter note, it directly affects their loan taking capacity of such NBFCs and thus effects banks. Such defaults affects industry as a whole
Good analysis
Reply
prathamaggarwal siddmuk2005
@siddmuk2005, Thanks.
Reply
trend was positive and was continuously trading above 61.8% level of entire fall
Reply
prathamaggarwal KumarAbhilash
@KumarAbhilash, Yes. What is your opinion going forward?
Reply
KumarAbhilash prathamaggarwal
Reply
Hi! Good to see you after a long hiatus!
Reply
prathamaggarwal ParimalDevnath
@ParimalDevnath, Hey Thanks!
Reply
i like your detailed analysis . Thanks for the write up ! really appreciate .
Reply
@joel-vg, Thanks for kind words, words of encouragement work like magic :)
Reply
Home Stock Screener Forex Screener Crypto Screener Economic Calendar Shows How It Works Chart Features Pricing House Rules Moderators Website & Broker Solutions Widgets Charting Solutions Lightweight Charting Library Help Center Refer a friend Feature Request Blog & News FAQ Wiki Twitter
Profile Profile Settings Account and Billing Refer a friend My Support Tickets Help Center Ideas Published Followers Following Private Messages Chat Sign Out