BankNifty - Banking The Trend ! - 7/22/2016
NPA? What NPA? It is really baffling to the investors who see huge figures - thousands of crore Rupees - being thrown at them by news papers and other media about the growing Non-Performing Assets (NPA) portfolio of large banks and still their stocks keep on rising ! Well to that point, if market is really about that simple correlation then wouldn't be the mathematics professors reaping millions every month ;)
So for trading big Indian PSU lenders, looking at NPA is useless. Why? because if they are in a hole, government will rescue them. And since, power + money circle is endless, there is no end for this loop too. Follow this simple formula, whenever these big banks are down big, simply own it and wait for government to intervene and as soon as they are chirpy again, reduce the stake and start selling covered calls.
Right now market is working on multiple themes simultaneously and all pointing to the upside as of now. So there is no point in fighting the trend until we reach good resistance. As we have described earlier that our domestic market is not being run by Indian fundamentals only. Try putting S&P 500 emini futures chart on NIFTY and you will get the revelation. (bombaybulls.com/nifty-not-a-domestic-market-index-you-know-about-6302016/ ) Besides, everybody is talking about throwing more money into the system. In this situation, market simply can't go down. But that doesn't mean that market can't open gapped down few hundred points on someday ! So trading such market requires real patience since BankNIfty can't be traded 24 hrs.
As of now, 20,000 level is good resistance for BankNIFTY. Even possibility is that 19,000 can put up a good fight but as the things stand, we like to trade against much better resistance with more probability in favour than relying against something which is 50/50.
So for trading big Indian PSU lenders, looking at NPA is useless. Why? because if they are in a hole, government will rescue them. And since, power + money circle is endless, there is no end for this loop too. Follow this simple formula, whenever these big banks are down big, simply own it and wait for government to intervene and as soon as they are chirpy again, reduce the stake and start selling covered calls.
Right now market is working on multiple themes simultaneously and all pointing to the upside as of now. So there is no point in fighting the trend until we reach good resistance. As we have described earlier that our domestic market is not being run by Indian fundamentals only. Try putting S&P 500 emini futures chart on NIFTY and you will get the revelation. (bombaybulls.com/nifty-not-a-domestic-market-index-you-know-about-6302016/ ) Besides, everybody is talking about throwing more money into the system. In this situation, market simply can't go down. But that doesn't mean that market can't open gapped down few hundred points on someday ! So trading such market requires real patience since BankNIfty can't be traded 24 hrs.
As of now, 20,000 level is good resistance for BankNIFTY. Even possibility is that 19,000 can put up a good fight but as the things stand, we like to trade against much better resistance with more probability in favour than relying against something which is 50/50.
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