PostMortem on BankNifty Today & Analysis of 19 MAY 2023

2023年5月19日

There was so much of hidden meaning in today's price action. Both banknifty and Nifty50 opened gap-up and then started falling. Banknifty fell 0.97% from High to Low, whereas Nifty fell 0.66% only. 

This fall is the 1st anomaly, this happened at a time when NiftyIT was roaring! It opened gap-up and was shooting up. Which goes to prove that either Reliance or BankNifty had to fall to enable Nifty50 to continue its price action from the previous day.

It was not normal to expect banknifty to keep falling as it has been creating continuous higher lows for a long time now. The question was when will it reverse, because my marked SR level is 43253, and other than the 1hr red candle there was no follow through.

Banknifty took some time to gain strength and then started breaking out at 13.50, it went up 393pts by 15.10 and almost hitting the recent swing high. 
What this did to N50 is the 2nd anomaly, it helped it snap out of the bearish sentiment. Sometimes a 40% weighted component like BN can pull so much of weight to turn the bias of N50 (really fascinating). This small momentum could help Nifty conquer the 2 resistances in the upcoming week.

The options data was not hinting at this reversal, till 13.00 - the CEs were getting aggressively written. And once this sentiment changed more participants started writing PEs.
Why is there so much buying at the top levels, I do not really know. Is FOMO fever back? Saw a news DAX (Germany) hit a new 52wk high. So the bearish cloud is starting to disappear for real?

(to view all 6 charts & indicators visit viswaram. com)
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From a trading perspective these need not bother you. Longer term investments can be done via SIPs or lumpsum based on whether your main income is from salary or self-employment.

Traders are in the business of speculation, i.e in the short-term where the markets are likely to go (or not go). And factually traders need not have FOMO - just need to get your views backed by solid research.

If you are just starting out, go ahead with credit spreads in weekly expiries. It will give you learnings if your view is wrong & earnings if its right.