PostMortem on BankNifty Today & Analysis of 03 MAY 2023 - FOMCJust look at the 5mts chart of NSE:BANKNIFTY today - what do you see? I see the strength of the bulls. Even though the opening was gap-down and below the support line 43253, banknifty managed to scale back by 10.45.
The first attempt was rejected - rightly so because NSE:NIFTY was looking weak and the market participants would have anticipated more selling pressure.
Surprisingly banknifty did not have any selling momentum, by 14.30 the 43253 resistance was conclusively breached. Yeah, we did not close in green but just 39pts lower than yesterday's close.
Having such a dichotomy with Nifty50 is not good for NSE:BANKNIFTY . We cannot have a situation where banknifty is crossing the all time highs whereas Nifty50 is 8 to 10% lower.
One factor was the under performance by NiftyIT which is mirroring the US tech index. If we continue this outperformance by the banks vs IT - then the weightage of financial stocks will increase further diverging these 2 indices.
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On a generic note, I am quite surprised how the bank stocks in India are staying afloat when the US banks are under severe pressure.
SP:SPF is down 22% from the ATH whereas Banknifty is nearing the ATH in India.
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Nifty50 did not have any negative price action today, it just stayed down after opening gap-down. We can interpret it as Nifty50 lacking buying strength.
Today's FOMC meeting and FED interest rate decision is definitely going to move the markets globally. If FED raises rates - the banks in US will be under severe pressure. If FED maintains status quo - people will doubt its credibility in fighting inflation.
However this was not visible on Nifty50 today, I seriously thought we will close in deep red today mirroring the SP:SPX from yesterday.
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15mts TF, remember the rounded top formation we were talking about yesterday. Forget that, today's price action is not showing an interim top formation - the momentum is still too strong on the bull side.
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1hr TF shows the price action much more clearly, instead of a top formation what got formed is a start of a new leg. A higher-low is visible and if we continue to take out 43500 in the next 2 sessions we will have its higher-high too.
Technicals will work only if the fundamentals remain the same. It is quite unlikely that the fundamentals will remain the same for tomorrow as the FOMC meeting will have multi polar repercussions.
