PostMortem on BankNifty Today & Analysis of 25 JAN 2023 Expiry

25 ม.ค. 2023

What a day today ! I had to take some for things to sink in. We literally had 3 support & resistance in play today & that should make an amazing post mortem today.
The open was inline at 42703 very near to the close yesterday, i was hesitant to go in with a debit ratio spread of 42500/42400 PE 2:4 ratio when it had only 28pts premium. The major reason i didnt take the position overnight was the 15mts chart was showing bullish instead of bearish.
Things turned the exact opposite today, right from the open. BANKNIFTY did not rest until the 2nd support of 41940 was not hit at 10.40. We had a drop of 1.8% ~ 769pts in the opening 90mts.
BN didnt stop there, the candle at 11.20 had a fall of 0.85% ~ 358pts - pretty brutal move in 5mts. The 3rd support of 41629 did resolve the matter. Its easy for me to say now, but at 11.30 you should have seen the surge in premiums of PEs that are expiring today. Nobody would believe even if i told you - so let me show you.
We were at 42700 during open, so let me show you the surge of 3 option strikes, 42500 PE, 42000 PE & 41500 PE all in 5mts TF
Just look at the craziness from these graphs, 42500 PE went up 1726%, 4200 PE 8186% and 41500 PE 6844%. Among this 41500 went back to 0 as it expired out of money.
Couple of days back we did discuss about the danger of having low premiums, low VIX. This is what exactly happens - this is the beast BANKNIFTY is. If we dont play safely our entire year's returns can be wiped out in a day.
The other strike prices also did not fail to impress, even 31500 PE which was 26% away from the spot had a rally of 333% - no one was spared today! On the other hand most traders would love to have expiries like today wherein a month's return can be made in a day if we get the positioning right.

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I was referring to the 15mts TF yesterday and said how bullish it looked, but take a look now - its broken the support levels and now that i have to change my opinion.
1hr wasnt having any clarity anyways, so today we have quite near the support levels of the recent swing low on 23 Dec. If we further slip its going to be exciting as the momentum will explode - mainly because of the time we have spent at this range.
A breakdown from this level will ensure we have a 2nd leg lower low formation commencement for the trend that started on 14 Dec. Where 04 Jan would be lower high of the 1st leg.
There is no point in discussing the BANKNIFTYcomponents in detail today because the broad based selling did impact every bank except Kotak bank. Today's last wolf standing was Kotak - the chart pattern was not bearish too today.
There was also news of Hindenburg research on Adani group & the accusations of Fraud. We all would have read reports on the amount of debt Adani groups has taken - may be this report was sentiment negative for the banks.

On a personal note, i have no bias for Adani or its group companies. I dont have any stock or position nor interested to accumulate any of its shares. I personally feel its safe to avoid stocks that are over leveraged. One of the reason i am not tracking Nifty50 or its ETF is because of the presence of some firms like these. Sensex is a better & stable index - unfortunately most of the ETFs & index funds do not track SENSEX with good volumes as it does Nifty50.

To view the 5 charts discussed today, contact viswaram