PostMortem on BankNifty Today & Analysis of 07 DEC 2022
RBI Governor announced the Repo Rate hike of 0.35% to 6.25% currently - see the minutes here. Inflation in Oct 2022 reduced to 0.6% to 6.8%. And our GDP growth reduced to 6.8%.
Listening to the speech i felt the global economy is in big trouble & India is in a far better shape. Also there is a possibility of further rate hikes as the accepted inflation band is ~ 4%.
What i did not understand is how the Indian rupee will gain strength once the US dollar starts cooling off - because the US FED is still hawkish, their inflation is much higher than India. So ideally they will keep raising rates helping the USD to appreciate much further. Did he mean to say that INR will appreciate once a top is formed by the USD??
Coming back to the banknifty trades today, the price moved exactly proportional to the amount of news broadcasted. Opening was at 43157 and then rallied all the way till 10.00 when the RBI Gov. started speaking. Then as the news was priced in the BN started collapsing. From 10.25 to 11.00 we had a fall of over 355pts.
And then bank nifty recovered till 13.30. The fall from 13.35 to 14.10 was something i thought will not stop. I felt it could form a 2nd leg of dip closing below the 1st leg making a lower low - this did not happen indicating the enormous conviction by the bulls not to give up.
Final close was just 0.09% down - not a meaningful margin considering the amount of news flow we had today.
I would like to bring back the comparison with the SPX index just to show the strength of banknifty. The spreads at +21.61% vs -8.48%.
Considering all this the BN is showing enormous relative strength and the willingness to hold the ground. Recently 2 of my bearish views did not work out - looking at the price action i am strongly inclined to go short, but the market is just not breaking down.
For all the analysts who says the Indian equity market can stay insulated from the global macros - i dont have anything to counter with. I am of the club that believes the US market controls the direction of world indices by regulating the supply/demand of US dollar.
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Of the bank nifty components
HDFC bank exactly mirrored the move in banknifty chart
ICICI rose in the same period and then fell back to flat line - looks like a position taken to counter the selling in hdfcbank as the index weightage of both are not that wide now.
SBI had a fall that shows continuation to the chart pattern yesterday.
AXIS had a bullish move continuing from the trend yesterday.
Kotak fell at the open similar to HDFCbk but the chart pattern appears to be negative when looked in continuation from yesterday's price action.
IndusInd showed bearish chart pattern.
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15mts chart pattern is yet to give a promising sell call, but since i am an aggressive trader - i'd like to go short. The chart pattern in itself shows a range based trade between support of 42883 and resistance of 43253. Conservative traders may prefer to execute non directional strategies and adjust if BN breaks any SR.
1hr has not given any directional clue so far.
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Listening to the speech i felt the global economy is in big trouble & India is in a far better shape. Also there is a possibility of further rate hikes as the accepted inflation band is ~ 4%.
What i did not understand is how the Indian rupee will gain strength once the US dollar starts cooling off - because the US FED is still hawkish, their inflation is much higher than India. So ideally they will keep raising rates helping the USD to appreciate much further. Did he mean to say that INR will appreciate once a top is formed by the USD??
Coming back to the banknifty trades today, the price moved exactly proportional to the amount of news broadcasted. Opening was at 43157 and then rallied all the way till 10.00 when the RBI Gov. started speaking. Then as the news was priced in the BN started collapsing. From 10.25 to 11.00 we had a fall of over 355pts.
And then bank nifty recovered till 13.30. The fall from 13.35 to 14.10 was something i thought will not stop. I felt it could form a 2nd leg of dip closing below the 1st leg making a lower low - this did not happen indicating the enormous conviction by the bulls not to give up.
Final close was just 0.09% down - not a meaningful margin considering the amount of news flow we had today.
I would like to bring back the comparison with the SPX index just to show the strength of banknifty. The spreads at +21.61% vs -8.48%.
Considering all this the BN is showing enormous relative strength and the willingness to hold the ground. Recently 2 of my bearish views did not work out - looking at the price action i am strongly inclined to go short, but the market is just not breaking down.
For all the analysts who says the Indian equity market can stay insulated from the global macros - i dont have anything to counter with. I am of the club that believes the US market controls the direction of world indices by regulating the supply/demand of US dollar.
---
Of the bank nifty components
HDFC bank exactly mirrored the move in banknifty chart
ICICI rose in the same period and then fell back to flat line - looks like a position taken to counter the selling in hdfcbank as the index weightage of both are not that wide now.
SBI had a fall that shows continuation to the chart pattern yesterday.
AXIS had a bullish move continuing from the trend yesterday.
Kotak fell at the open similar to HDFCbk but the chart pattern appears to be negative when looked in continuation from yesterday's price action.
IndusInd showed bearish chart pattern.
---
15mts chart pattern is yet to give a promising sell call, but since i am an aggressive trader - i'd like to go short. The chart pattern in itself shows a range based trade between support of 42883 and resistance of 43253. Conservative traders may prefer to execute non directional strategies and adjust if BN breaks any SR.
1hr has not given any directional clue so far.
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