PostMortem on BankNifty Today & Analysis of 05 JUN 2023
A positive day for sure +0.37% close, but the trading action did not show positivity. The gap up opening might have been result of a 1.45% gain on SPX on Friday.
We started building on the gap-up today and it seemed like we will be having an outperformance just like SPX. At least that was what the price action told us till 11.25. When I monitored the options premiums, the PE side was also showing bullish spreads getting written till this 11.25 move. And after that it just went silent, there was no follow-through.
For the next 2hr 45 mts i.e till 14.00 there was no real move anywhere. The bulls really did not have enough ampere to take it up further. I am really not sure why, because conditions were quite favorable to them today.
After 14.00 we then had a breakdown of 193pts that took banknifty back to its support level of 44068. The last 90mts of price action was not favoring the bulls by any fashion. One of the reason for this underperformance would be attributed to contrasting price moves by HDFCBk vs ICICIBK and KotakBank Vs AxisBank.
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15mts TF shows an interrupt of the normal price action formed by the island today. The price continuation suggests we need to trade below the support level soon if the 31st May 1st red candle had any meaning.
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1hr TF may not even change bias until the 43253 2nd support is taken out, such is the strength of the trend at present. A closer look at the EMAs will tell you that.
Since we have a interest rate decision by RBI this Thursday, I personally feel the MPC panel will find it difficult to pass this one without any rate hikes. The banks are showing too much green in their books, god knows the last time we had such a great show. This also means the rate hike has not stressed the banking unit even by a small inch! If banks dont stop lending, the inflation will not keep its nose down.
With the Rs2000 denomination reaching back at the banks and most of them making way to Fixed deposits, RBI might be forced to slash the rates pretty earlier than they projected. Otherwise banking will have a supply problem and not a demand problem.
We started building on the gap-up today and it seemed like we will be having an outperformance just like SPX. At least that was what the price action told us till 11.25. When I monitored the options premiums, the PE side was also showing bullish spreads getting written till this 11.25 move. And after that it just went silent, there was no follow-through.
For the next 2hr 45 mts i.e till 14.00 there was no real move anywhere. The bulls really did not have enough ampere to take it up further. I am really not sure why, because conditions were quite favorable to them today.
After 14.00 we then had a breakdown of 193pts that took banknifty back to its support level of 44068. The last 90mts of price action was not favoring the bulls by any fashion. One of the reason for this underperformance would be attributed to contrasting price moves by HDFCBk vs ICICIBK and KotakBank Vs AxisBank.
---
15mts TF shows an interrupt of the normal price action formed by the island today. The price continuation suggests we need to trade below the support level soon if the 31st May 1st red candle had any meaning.
---
1hr TF may not even change bias until the 43253 2nd support is taken out, such is the strength of the trend at present. A closer look at the EMAs will tell you that.
Since we have a interest rate decision by RBI this Thursday, I personally feel the MPC panel will find it difficult to pass this one without any rate hikes. The banks are showing too much green in their books, god knows the last time we had such a great show. This also means the rate hike has not stressed the banking unit even by a small inch! If banks dont stop lending, the inflation will not keep its nose down.
With the Rs2000 denomination reaching back at the banks and most of them making way to Fixed deposits, RBI might be forced to slash the rates pretty earlier than they projected. Otherwise banking will have a supply problem and not a demand problem.