PostMortem on BankNifty Today & Analysis of 17 Mar 2023
The trades till 14.20 was kind of predictable, but the last 1 hour was really special. 
BANKNIFTY got wings !
The open was gap up at 39442 and then we started dropping gradually. At around 10.00 i posted "BANKNIFTY PE premiums are unusually high ! either traders expecting huge downside today or maybe its good time for PE credit spread" in the bank nifty minds.
Looking at the PE premiums i felt the market was preparing for the down move and rightly it moved down 1.7% ~ 673pts from the high of the day till 13.00. The PE premiums elevated further from 10.00 giving the confidence that markets are falling.
Remember in yesterday's report i was quite surprised with the moves from 12.35 to close? - read here. Today's first 4 hours were spent in undoing those moves. Most likely it would have been the positions that were taken yesterday to stabilize the expiry that got unwound today. The segment highlighted in cyan color is the build up & the unwinding that would have happened.
But just looking at the option data, i felt we may not break down further, i posted at 13.25 that "BANKNIFTY CE credit spreads are not getting written aggressively so i prefer not to short this market until the smart money moves in"
The logic being traders who feel the markets will go lower will start writing ATM calls, the surge in volumes & proportional change in premium pricing will give clues if the momentum is building.
Well there were no clues as such & i avoided going short even though i was preparing if we neared the 38690 level. Luckily i escaped a stop loss hit if i had gone short.
The moves from 14.30 to close were too difficult to comprehend. All the major banks rose with solid gains in volumes showing a trend.
BANKNIFTY rose 1.87% ~ 727pts to close the day strong. The news of HDFC-HDFCBK merger may have aided the strong momentum.
BANKNIFTY got wings !The open was gap up at 39442 and then we started dropping gradually. At around 10.00 i posted "
BANKNIFTY PE premiums are unusually high ! either traders expecting huge downside today or maybe its good time for PE credit spread" in the bank nifty minds.Looking at the PE premiums i felt the market was preparing for the down move and rightly it moved down 1.7% ~ 673pts from the high of the day till 13.00. The PE premiums elevated further from 10.00 giving the confidence that markets are falling.
Remember in yesterday's report i was quite surprised with the moves from 12.35 to close? - read here. Today's first 4 hours were spent in undoing those moves. Most likely it would have been the positions that were taken yesterday to stabilize the expiry that got unwound today. The segment highlighted in cyan color is the build up & the unwinding that would have happened.
But just looking at the option data, i felt we may not break down further, i posted at 13.25 that "
BANKNIFTY CE credit spreads are not getting written aggressively so i prefer not to short this market until the smart money moves in"The logic being traders who feel the markets will go lower will start writing ATM calls, the surge in volumes & proportional change in premium pricing will give clues if the momentum is building.
Well there were no clues as such & i avoided going short even though i was preparing if we neared the 38690 level. Luckily i escaped a stop loss hit if i had gone short.
The moves from 14.30 to close were too difficult to comprehend. All the major banks rose with solid gains in volumes showing a trend.
BANKNIFTY rose 1.87% ~ 727pts to close the day strong. The news of HDFC-HDFCBK merger may have aided the strong momentum.
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