18 Jul ’23 Post Mortem on Nifty - Reliance's impact on nifty50?

NSE:NIFTY   Nifty 50 Index
Nifty50 had a surprising comeback today, we opened gap up and then there was a strong rally till 11.05 where we set a new all time high of 19819.45. From 11.05 to 12.05 we had a decent fall of 129pts ~ 0.65%.
Surprisingly the falling stopped right there and we bounced back quite strong. NiftyIT took part in the rally post 13.30 which helped Nifty stay green. BankNifty was not that supportive though (we will discuss in detail below).
Today’s price action shows someone will come up to support nifty in its pursuit, if the banks fail, IT supports. If IT underperforms then RELIANCE or ITC will support. The last 800pts rally would have really sucked the soul out of the bears. No matter what they do, they cannot push down the prices.
I was waiting for Nifty to fall below the 19600 to go short, I did not want to go long because I was scared of heights 🙂. How Reliance demerger will plan out on 19th July is another question. The current stock value of Reliance is considered as the sum of reliance + jio financials. On 19th both the entities will be delisted and on 20th only reliance will be relisted. So whatever price difference between the closing price of 19th and pre open price of 20th is considered the share price & percentage of Jio financials.
In an ideal case Nifty50 index should take a big hit - I am yet to find out how they are hard coding to prevent this from happening. Thats because Jio Financials as a separate entity is not eligible to be part of Nifty50 & Reliance will have a reduced market cap & pricing which should create outflows.

The hourly chart is looking bullish and no worries so far. I am so inclined to be a contrarian and take a short position near the 19600 levels, not because I am bearish but because I am so shocked to see this rally. Believe a profit booking is overdue.


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