PostMortem on BankNifty Today & Analysis of 21 DEC 2022
Banknifty made some deep moves today engaging 3 of its support/resistance areas. Lets analyze it one by one
Totally unexpected gap up open 43525 on weak global cues and then 3 up candles. From there a test of 1st support 43247 at 12.10 - a fail. Further down move and 2nd support of 42884 at 13.50 - also a fail.
Then we had the 3rd support 42570 test at 13.55 - a pass. The moves from 14.00 to close had again a retest of 42884 resistance level - a fail and then the closing near the bottom of the day just above the support level.
Breaking 2 support lines will usually change my bias to bearish side. But i would need to know why it broke today and going by the deep cuts i assume there should be some macro or geo-political news. Because last time i checked the bank nifty components almost all of them were trading with the same downslope - this agreement comes only if there is a news element.
Today's move has driven the options premium through the roof. Some PE premiums went up more than 100%.
41500 PE which is 1100pts away from the spot went up from 9.49 to 106.9 in 8mts. a surge of 1032.47%. What was the reason for this - need to find out.
Was this premium justified - absolutely not. Final close for the day was at 14.1 (down 86.9% from the HOD)
The volume of the CE options - again immensely higher. 49000 CE was traded for 74.22 lakhs a strike thats 6400pts 15% away with 1 DTE
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Of the bank nifty components:
Almost all the banks had a similar slope of fall. Since there is alignment today i am not discussing the patterns for each banks in specific.
If all of them are moving same way - it has to do with macro or event in specific. Some possible reasons could be - RBI intervention - change in rates, SLR or liquidity, change in NPA calculation metrics. Govt intervention - loan write off, issue of new loans w/o collateral, lack of funding, liquidity issues. Govt. fiscal deficit. Lock down fears. GDP calculation mismatch. Corruption etc.
If its not any of these - then its the time to start thinking about shorting bank nifty index. After all the run up from 32500 to 43000 was so crazy.
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Both 15mts and 1hr TF is showing bullish reversal patterns - but i am not convinced yet. The fall is not technical, it could be fundamental. If it was a technical move then we need follow throughs on 22nd and 23rd. If we do - then its going to be a deadly fall next week.
Totally unexpected gap up open 43525 on weak global cues and then 3 up candles. From there a test of 1st support 43247 at 12.10 - a fail. Further down move and 2nd support of 42884 at 13.50 - also a fail.
Then we had the 3rd support 42570 test at 13.55 - a pass. The moves from 14.00 to close had again a retest of 42884 resistance level - a fail and then the closing near the bottom of the day just above the support level.
Breaking 2 support lines will usually change my bias to bearish side. But i would need to know why it broke today and going by the deep cuts i assume there should be some macro or geo-political news. Because last time i checked the bank nifty components almost all of them were trading with the same downslope - this agreement comes only if there is a news element.
Today's move has driven the options premium through the roof. Some PE premiums went up more than 100%.
41500 PE which is 1100pts away from the spot went up from 9.49 to 106.9 in 8mts. a surge of 1032.47%. What was the reason for this - need to find out.
Was this premium justified - absolutely not. Final close for the day was at 14.1 (down 86.9% from the HOD)
The volume of the CE options - again immensely higher. 49000 CE was traded for 74.22 lakhs a strike thats 6400pts 15% away with 1 DTE
---
Of the bank nifty components:
Almost all the banks had a similar slope of fall. Since there is alignment today i am not discussing the patterns for each banks in specific.
If all of them are moving same way - it has to do with macro or event in specific. Some possible reasons could be - RBI intervention - change in rates, SLR or liquidity, change in NPA calculation metrics. Govt intervention - loan write off, issue of new loans w/o collateral, lack of funding, liquidity issues. Govt. fiscal deficit. Lock down fears. GDP calculation mismatch. Corruption etc.
If its not any of these - then its the time to start thinking about shorting bank nifty index. After all the run up from 32500 to 43000 was so crazy.
---
Both 15mts and 1hr TF is showing bullish reversal patterns - but i am not convinced yet. The fall is not technical, it could be fundamental. If it was a technical move then we need follow throughs on 22nd and 23rd. If we do - then its going to be a deadly fall next week.
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