PostMortem on BankNifty Today & Analysis of 06 APR 2023 Expiry
Yesterday 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.
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Coming back to our
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 asBANKNIFTY 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!
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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 thenBANKNIFTY would be rejoicing the resistances it has torn apart & would like to keep moving up.
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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 ?
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
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
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
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 ?
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