In a surprise move, both the indices bucked the falling trend and showed some respite. The Bank Nifty had a spectacular rally led by ICICI Bank, which single-handedly gained 8.1%. While today’s rally is a welcome relief, the short-term trend remains bearish and in all probability we will see the addition of short positions or even initiation of fresh shorts in the next few days.
The Nifty opened almost flat from yesterday’s close at 8215.55 and touched an intraday low of 8185.15 before decisively finding support and fresh buying. It touched an intraday high of 8308.00 and closed near the high point of the day at 8285.60. An up move of 0.9%. The 8200 put saw the highest open interest build up in the series followed by the 8100 put. On the call side, the 8500 call saw significant additions to open interest. Market breadth was positive for most of the day with 925 stocks advancing and 438 stocks declining at the time of closing.
The Bank Nifty had a spectacular rally opening at 17766.60, which was also the day’s low and gained consistently throughout the day. It touched an intraday high of 18320.10, however, closed 478.70 (2.7%) points up at 18246.20. The 18000 put and the 18500 call saw the highest open interest build up in the series.
FIIs were net sellers to the tune of 1532.84 crores, and the DIIs were net buyers of 1537.08 crores in the cash markets today.
Technical Analysis – Nifty & Bank Nifty
The Nifty continues to look weak on the Ichimoku Heikin Ashi chart and, in fact, gives us a sell signal today. The Tenkan Sen and the Kijun Sen have been in an overlapped state for the last few days however today; the Tenkan Sen has decisively broken down. From a pure Ichimoku perspective, all signals point towards an extremely weak chart setup for the Nifty and makes a good entry point on the short side.
The Kumo is bearish and, in addition, is also widening and sloping downwards. The price action, the Chikou Span, the Tenkan Sen and the Kijun Sen all are clearly in the bearish region and today’s Tenkan – Kijun cross is a strong signal to go short. The Heikin Ashi Candlesticks also support the short entry along with haDelta signaling a sell and being in the bearish zone.
The Bank Nifty continues to play an interesting trade. While the flat Kijun Sen signals a consolidation, the Chikou has again found support close to the earlier bounce back level. It is the same Kumo bottom level from which we had seen a pullback. It will be interesting to see if the Bank Nifty continues this rally or slides down. From a charting perspective, the Bank Nifty counter continues to look weak and today’s move might be a flash in the pan. All Ichimoku, Heikin Ashi indicators continue to look bearish.
In my view, once when this level is decisively broken on the downside, the Bank Nifty will fall like a pack of cards. Let’s watch the trade action for the next two days before we consider any fresh positions in this counter.