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05 Apr -Algo trades went from profits to loss in last 30mts -BNBankNifty Analysis - Stance Bullish ⬆️ The line we drew yesterday was more or less right. Banknifty respected the trend line and moved ahead when Nifty was trading flat. RBI MPC outcome expectations were not the reason we had the fall yesterday. I can say that with a high level of certainty because today we went past yesterday’s high. And as soon as we cut through that level an additional boost of 300+ points came in via short-covering or long build-up. I guess we discussed a higher-high, higher-low formation last week. I just drew that with the green-colored path lines. Can you spot the HH, HL pattern? All this was possible only after the 47465 resistance was breached. Also, notice how the momentum picked up right after the crossing. The major highlights from the RBI MPC meeting were The Repo rates are unchanged at 6.5% The stance is the withdrawal of accommodation (M3 money supply can be tracked to see if liquidity is getting removed or not) Inflation projected at 4.5% for current FY GDP expected at 7.6% for the current FY – Algo Trading Our algo trades ended today with a loss of Rs3246, things were cruising quite well when BN picked up momentum in the last 30 to 40mts.
NSE:BANKNIFTYLong
by viswaram
8th Dec ’23 - RBI’s meet clears the air for banknifty & finniftyBankNifty Analysis Banks had a totally different chart pattern than Nifty50 today. I would say the pattern by BankNifty was more mature and stable compared with Nifty. At no point in time, a breakdown was visible in BN today - yes, we dropped 0.67% ~ 316pts in between, but it was not as scary as N50. 4mts chart link - click here RBI Governor maintained status-quo today, A few of the important points from his meeting today - Repo rate at 6.5% - unchanged Withdrawal of accommodation stance - unchanged CPI inflation fell by 2% after the last MPC meet Real GDP for 2023-24 projected at 7% Connected lending framework - work in progress UPI limit enhanced Set up a Fintech Repository Remember how the banks were shy on 6th and 7th of December? The air is now clear for them - there are no hidden surprises from RBI this time. This could be one of the reasons we had an intraday bounce of 449pts ~ 0.96% after 1pm today. 63mts chart link - click here For the last 2 days, I was neutral on Banknifty - after the clarity shown today, I wish to change my stance back to bullish. The new ATH is now 47303.65. Would like to see some action by banks in the next week.
NSE:BANKNIFTYLong
by viswaram
7th Dec ’23 - tomorrow's RBI meet- more liquidity drain ???BankNifty Analysis The opening candle was very similar to the Nifty’s. The low set in the opening minutes ended up as the low of the day. In a way, it shows the bulls are still in control. The pattern was quite similar to yesterday. Weak open and then range-bound trade. 4mts chart link - click here Banks will be on their toes tomorrow huffing and puffing to the RBI Governor’s announcement. I feel he will bring in some measures to cut down the liquidity. The 2 last attempts by varying the iCRR and CAR did not go that well. Bank stocks reacted pretty badly but recovered and hit new highs. Paytm fell 20% today when it said it might cut back on small value loans ~ Rs50000. I guess this impact came from the hike in CAR weightage from the last meeting. 63mts chart link - click here I guess there is no clue from the chart here, will have to spend the time in front of the TV tomorrow to hear from the RBI governor directly. Since I am already neutral on BankNifty, my level to go short for tomorrow will be 46341.
NSE:BANKNIFTY
by viswaram
7th Dec ’23 - Should I change my Nifty stance to neutral?Nifty Today’s Analysis Recap from yesterday: “As an analyst, it is very difficult to predict when the trend will end, but we need to keep looking. For tomorrow, I prefer to continue with the long bias unless we give up the 20853 in the morning session.” 4mts chart link - click here The opening candle was explosive, in line opening with a strong fall. See the depth in RED - you will understand from the chart. I was eagerly waiting for it to cross that 20850 level today but that did not happen. Let us try to analyze why we had such a bold opening candle move. Both BankNifty and NiftyIT had a similar opening, so it was not an isolated issue. Some players might have sold off their winners to go light into tomorrow’s RBI meet or it could be a long unwinding out of fear that the markets will fall today due to the US market handout. From there Nifty climbed back to the 20920 level by 11.03 and then the trade was in a small range till the close. From 14.31 to 14.59. At 13.19, 20850 PE was trading at Rs1.95 when the spot was at 20911 - for me, it appeared damn cheap. Nifty made one more attempt - but it went nowhere. 63mts chart link - click here The last 4 candles of today had perfect “open = close” values. 3 of them were perfect Dojis - look up the textbook for Doji candles, maybe the example quoted there won't match with the real ones of today. Tomorrow’s RBI’s meet @ 10.00 AM is going to be a decider - no level of technical analysis can predict when there is a news flow expected. I wish to maintain my long stance as of now although it's itching to go neutral.
NSE:NIFTYLong
by viswaram
6th Dec ’23 - stance changed to neutral, RBI policy on Friday ?BankNifty Today Analysis BankNifty also had a gap up open, but the first-hour price action did not seem normal. Not just because we went underwater and traded negative for the rest of the day, but the lack of will by the banks to move up. We all know the RBI MPC started the meeting today and we will have the summary on Friday @ 10.00 AM. 5mts chart link - click here Seems like the market is expecting something from the RBI Governor this time. The last time he came up with a CAR (Capital Adequacy Ratio) weight increment - the markets fell. Prior to that, we had the I-CRR incremental cash reserve ratio of 10%. I guess he is doing everything to control the liquidity without raising the repo rates. What will he do this time - increase the weight on SLR (statutory liquidity ratio), ask banks to keep more collateral with RBI ? The next move by Banks will make or break Nifty, that is because to continue the breakout strategy we need strong momentum. We cannot have a situation where Nifty rockets with the BankNifty stalling. 63mts chart link - click here The first 63mts candle of today is encircled, see the weight its body carries. There was a drop of 482pts ~ 1.02%. So even though we hit a new ATH today, this candle looks worrisome. I wish to change my stance to neutral from bullish for tomorrow. We will get 100% clarity only by Friday on what RBI Governor has in mind, till then it is better to take only high-conviction trades.
NSE:BANKNIFTY
by viswaram
6th Oct ’23 - RBI meeting status quo - PostMortem BankNiftyBankNifty Analysis I had a bearish view for today, but it played out as a bad day for the bears. The RBI MPC meeting at 10 am did not move the needle that much. Usually, the RBI Governor’s speech drives up the volatility and we have some adverse moves. There was one strong move of 250pt from 10.50 to 11.20 where we pulled back from 44500 levels. Even then the options data did not get excited - and we knew that the fall was not going to last. Rightly so, Banknifty recovered quite decently and ended the day with good gains. Let us look at some points discussed by RBI Governer today - source Keep the repo rate unchanged at 6.5% Continuing the withdrawal of accommodative stance GDP growth is projected at 6.5% Inflation is projected at 5.4% The US Fed rate is 5.5% and ours is still at 6.5%, keeping the rates lower is not good for a country that needs to attract foreign investments. Although he started talking about the USDINR - that conversation did not last long. If the US decides to hold these rates for a longer tenure - a major chunk of emerging market investors could flee back and invest in dollars. An accommodative stance is usually provided to stimulate growth in the economy. RBI is just withdrawing the accommodation. Its fight is not removing liquidity with full intensity, as it may impact growth. If removing liquidity was a top priority - the stance should have been more hawkish. GDP growth at 6.5% is very good - no comments on this. Inflation at 5.4% is still bad. In his speech, he said he is very particular that inflation returns to the 4% band and then he forecasted the next FY inflation around 5.2%. By Shaving off 0.2% a year - how long will it take to reach back at 4%? He also said about removing liquidity by selling Government Bonds - I am not sure how that will work. Will have to burn my midnight oil to dig deeper into it. I am changing my stance from bearish to neutral as we have managed to break the 44068 resistance. Today’s price action imparts some stability to the current levels. The next levels to watch for will be 44702 if we are going up and 44136 if we are falling.
NSE:BANKNIFTY
by viswaram
5th Oct ’23 - Bearish despite gap-up - PostMortem BankNiftyBankNifty Analysis BankNifty had a similar chart pattern as that of Nifty. An opening gap-up of 272pts ~ 0.6% and then a 2nd leg of rally from 10.30 of 279pts ~ 0.63%. The only difference I saw was that after the day’s high was hit - BankNifty started falling gradually whereas Nifty went flat. Tomorrow’s RBI MPC outcome at 10.00 might be interesting. We would like to see how RBI governor is planning to suck the liquidity out. The I-CRR implementation and then its withdrawal created a ruckus last time. Markets fell first and then recovered equally. If the liquidity is left unchecked - the costs of goods & services will keep getting inflated. Unlike other developed countries - we do not want to hurt the growth and the growth in inflation is not hurting us that badly. I do not wish to change my bearish stance on BankNifty despite an up day today. The M pattern at 44650 levels are looking quite strong for me and until BankNifty takes them out - I do not even plan to go neutral as well. The biggest enemy of the bears is the implied volatility - the options premiums are not expecting a massive move this week even though we have an RBI event. Option sellers are having a tough time these days - I still think it's much better not to trade than sell strikes cheaply.
NSE:BANKNIFTYShort
by viswaram
PostMortem on BankNifty Today & Analysis of 07 JUN 2023 Banknifty was looking weaker compared to Nifty50 today, finally the day ended in green with a W pattern on 5mts TF. Although we started today with a gap-up, the index was bleeding. Banknifty fell underwater by 10.40 - meanwhile Nifty50 was surging supported mainly by NiftyIT which came back strong after yesterday's trashing. There was no strong downside momentum for banknifty, but the index was just weaker not having enough in it to rally as well. It was easy to tell that we will not have a big fall today looking at the options premium. Banknifty options had a lower implied volatility than Nifty50 thereby translating into cheaper option prices on BN. After 13.40 there was a huge buying momentum on Nifty50 mainly aided by Reliance, TCS and then the bank stocks also caught-up. Nifty50 went up 0.4% in the last 2 hours today pulling up banknifty above water and finally giving it gains of 0.25%. Nifty on the other hand closed 0.68% --- 15mts TF still shows banknifty in a range bound trade, we might need a range expansion trade day to exit this deadlock. If the momentum of Nifty50 is considered, then banknifty has higher chances to break upwards. --- 1hr TF shows banknifty trying to build up the momentum to go upwards. Still not clear why we had a drop on 31 May, there is no continuation of negative bias/event/triggers that could take banknifty further lower. All eyes will be on the interest rate decision by the RBI Monetary Policy Committee. Almost all the market participants are expecting a continuation of rate-pause (i.e. current interest rate of 6.5% will continue). I personally feel we might see a hike of 25bps to 6.75%. The main reason being the inability by the banks to stop the loan growth. Liquidity is still abundant in the system which will cast a shadow on "Inflation" by not cutting demand. Inflation which has cooled off, will not need that much of a time to rebound. If RBI is not deciding to hike the interest rate, they need to seriously consider bring down the liquidity. Withdrawal of accommodative stance has to be changed to "Withdrawal stance". I still think RBI has to be equally hawkish as the US & Europe central banks.
NSE:BANKNIFTY
by viswaram
PostMortem on BankNifty Today & Analysis of 06 APR 2023 ExpiryYesterday we discussed in detail the RBI MPC possibilities. If you read the article - I was expecting a hike. Surprisingly RBI maintained status quo today. Even when the inflation is at the elevated level a pause in rate hike should not be taken very lightly. An optimist would say it is an excellent decision that RBI is offering some breathing space for the financial markets. But a pessimist will see the decision today as an evident threat to the banks & lenders. In his speech RBI Governor emphasised how the global financial institutions became victim to the rate hikes carried out in advanced economies without naming SVB, Credit Suisse. If we apply the same logic here, it means the banks in our country may be having immense pressure coping up with the NPAs and issue of new loans. They may be at the verge of a breakdown that RBI decided to give them time to recoup. Inflation might have got a free hand here to run a little loose for now. It will be interesting to see how RBI reacts the next quarter. The upcoming summer season, rise in power/electricity utilization, depletion of coal reserves, less than normal monsoon are all parameters RBI takes into consideration along with the projections for crude oil. Download the RBI monetary policy report click here. --- Coming back to our NSE:BANKNIFTY analysis for today. We discussed the possibility of a pull back to the range level which should encourage the bears. Well that came early in the day. I must say we were on track to break the crucial 40880 support & the RBI surprise played spoilsport. Just after the declaration, banknifty jumped 321pts ~ 0.79% to break away from the support level. This ensured the 41500 CE which was just 700pts away from ATM spike 293%. i.e a surge of 18pts. 41000 CE went in the money and surged 208% ~ 151pts in the same time. I wanted to bring to your attention percentage wise 41500 CE gave a higher ROI vs 41000. Whereas 42000 CE did not even go past 93%. Just so that you know how to find the sweet spot ! By 11.10 the momentum faded and we started falling, and we were trading slightly negative between 13.45 to 14.25 before closing flat. I cannot really say the reversal at 11.10 came from the resistance level of 41311 as NSE:BANKNIFTY did not reach there. Even after these events the OTM of call as well as puts were totally dead today. The premiums were very low ruining any chances of arbitrage opportunities as part of weekly expiry. So personally I had a losing day! --- 15mts TF looking strong and bullish. Since it's a holiday tomorrow we would need to wait till Monday to know the next move. If the global markets fall in the next 2 sessions, then we may have a gap down. If everything stays normal then NSE:BANKNIFTY would be rejoicing the resistances it has torn apart & would like to keep moving up. --- 1hr TF has formed the perfect W pattern which leaves us with a question - will bank nifty continue to break the bearish trend it started in 14 Dec 2022 ?
NSE:BANKNIFTY
by viswaram
PostMortem on BankNifty Today & Analysis of 05 APR 2023 RBI MPCBefore we get into today's analysis let us spend some time on Inflation, MPC minutes by RBI & health of banking sector. You might be aware we have the MPC minutes & interest rate decision tomorrow. There are 3 possible outcomes status quo dovish hawkish  What really prompts RBI to rate hike are 2 things Inflation Liquidity in the markets Now the last minutes showed RBI not planning to lower its guard on fighting inflation - read here. What this means is that the inflation is still persisting at the upper band of 6%. And thats not at all good news for the economy as the cost of products keep rising at a level which will push a lot of people into malnutrition. The best tool the central bank has to counter inflation is to slow the economy by making the borrowing costs higher. ie increase interest rate (hawkishness).  In spite of the recent rate hikes, the 10YR GOI bonds reference index is trading at 7.27%. The banks has raised their lending rates as well as the deposit rates - but this is not materially felt in the GOI bonds or Gsecs. For comparison purpose, the 10YR US bonds has been plotted against the 10YR IN. Look at how steadily we have maintained a range whereas US bond rates has climbed 700% from the swing low. What I am trying to say is that the recent rate hikes here has not impacted the stock market, only if the higher tenure bond rates go up we can expect the stock market to fall. ie. people liquidating their equity scrips in favor of GOI bonds to get assured returns. Now the real reason why the Gsecs are not providing yields above 7.5% is something I have no clue on.  What happens if RBI increases the rates too much? The borrowers will have to cut down their expenses, capex etc to save money and reduce dependence on loans. One of the best way to do that is to reduce the employee strength. None of the previous rate hikes has triggered such a situation, RBI is also playing safe not to push it too much - a political move fearing the 2024 elections? I do not know.  Until they do that, people will continue to spend very heavily on commodity which will help inflation stay elevated. Recently the Govt. of India removed the LTCG indexation benefit for debt funds. Indexation benefit is the only thing that really accounts for the failure of the government in controlling the inflation. Because higher the inflation lesser will be the capital gains tax for the debt funds. Now the removal of this inflation index from picture is an open license to let inflation run elevated? I do not know. --- Coming back to the analysis part, NSE:BANKNIFTY opened well above the resistance level of 40880 at 40972. Made a strong 1st candle briefly coming below this SR and then closed higher indicating bulls may be in control. Today's NSE:BANKNIFTY performance might be skewed due to the moves in NSE:HDFCBANK - I am yet to figure out why we had a 2.68% gain in HDFCBK the highest weighted stock in bank nifty index. If you look at the opening minutes of the other major banks the counter balance trades that had to be done to keep NSE:BANKNIFTY at neutral position was so huge. NSE:ICICIBANK , NSE:KOTAKBANK , NSE:AXISBANK & NSE:SBIN had to go into negative territory to compensate for the weight exerted by NSE:HDFCBANK . And for some reasons these were not impacting the option prices. On some other day the option premiums would have shot up due to the uncertainty - but today we had a below normal premiums. Even with the MPC scheduled for tomorrow - there was no fear ! The option prices dipped below the usual Wednesday closing averages. --- 15mts chart is looking bullish now with the top most support point well defended. Bears can only hope we have a pull back rally, if they are lucky the HDFCbk trades could reverse tomorrow bringing NSE:BANKNIFTY back to the range. Charts do not work on hopes, but we humans do! --- 1hr is not bearish nor bullish. Further resistance break out will shift the sentiment in favor of the bulls. A decent pull back should be in the cards because of the distance price has covered from 27th March.
NSE:BANKNIFTY
by viswaram