Category Archives: Bank Nifty Technical Analysis

Latest view on Bank Nifty. Practical trading strategy on Bank Nifty, with exact levels to enter, exit and stop

Does Market is topping out???

First my apology for such a long break, as due to some health issues I was not able to send weekly newsletters, I hope I may able to continue this activity in future. Purpose of writing today is just one email and few phone calls, yes. In the last week I received one email from one of my newsletter subscriber that “Sir, can I go short at these levels?”  Question was simple and straight, and if preferred I would have given answer in one word Yes or No, but I thought let me try to elaborate this answer with some points, and I know that this question is not only in senders mind but most of the traders must be thinking to find the answer. So I am making a small attempt to rationalize my answer, and its upto you whether to buy my idea or not.

I had an opportunity to speak to lot of market participants day in day out, few of them are extremely smart and couple of them are innocent and trades with irrational approach, and thats the reason why market is running, because if everybody starts thinking in same line then from where the equilibrium is going to come. So let me tell you what I hear from them “Sir, I shorted Nifty at 8300 levels can I rollover for next month”, “Boss, look at the PE of Nifty, it is trading near the highs and for sure market is going tocollapse, I am creating shorts, what max higher it can go, please tell me the level?”, there are few “Sir, didn’t get a chance to buy in market, can i buy at current levels, please suggest the stop loss”, “You know I was out of town (one of the excuse), so couldn’t create any longs, but now we’ll not miss the shorting opportunity” (now this guy may have capacity to stand in wrong direction of 100-300 points, but will book profit in just 50 or less than that, but have some emotional log to carry tops and bottoms) , and also there are few forecasters (who also forecast for day-hours-minutes), who are in just search of to call tops and bottoms, there are other who likes to remain contra every time and out of ten even if they go right 2-3 times they remain star of channel. Now after hearing so much diverse opinion few things comes in my mind – firstly, there is strong left out feeling in many retail and I also believe that there are few funds as well whose earlier call was that market is likely to collapse near 8000 levels, so by force this guys are going to work in the market, may be by compulsion or may be due to obsessions. Secondly, there are already few contra shorts seating in the market, earlier their stop loss was 8700 and now may be they must have shifted base to 9100 or 9200 (they believe that market will not go above that). And lastly few turned analyst will argue that market is in overbought territory. This are just psychological aspects which I discussed, there is no concrete aspects to support the idea, just biased notions, herd mentality or something else.

Now let’s check what charts are saying.nifty daily chart

Above is daily chart of Nifty, you can see that Nifty have given breakout from a consolidation almost after a month with rising volume.

nifty weekly chart

One may see on weekly chart, that trend is clearly defined and indicating further surge in weeks to come. So why to doubt at these juncture.

Similarly Bank Nifty weekly chart is poised with bullish bias, however on daily charts it is showing an early signs of exhaustion, but unless we get any confirmation, it is better to stay afloat.


Above is Nifty and India VIX chart, now one may see that VIX may continue to trade in lower territory and Nifty continue to rise, yes we might see some knee jerk reaction in between, but that is part and parcel of the game. It’s like this when market is in jubilant mode it can stay afloat in overbought territory for a long.

If we see FII’s data they are heavily long in Index futures and at the same time they are taking bullish bets through options, otherwise generally they keep some hedge with options. In the last week we observed that even DII’s are turning buyers in the market, in most of the cases they remain mean reverting player, whenever FII’s are buying they are selling, but this time it is not the case.

Okay, so with above all arguments one may derive few points.

1 – There is strong left out feeling in the market, and this crowd may take wrong position in hesitations.

2- Charts and data is clearly suggesting bullish bias.

3- If market go against this contra crowd then they will take markets further higher, who knows where market goes in short covering.

bears trap1

bear trap2

And like this strory continues…

So, to answer my friends query I would say that don’t try to preempt the markets, stay afloat with existing trend which is bullish. Don’t try to fall in trap with forecasting of tops, at max what you may miss is 100-200 points if at all top is placed or in offing. Can you create fresh long at this juncture, then answer is yes, but very subjective; if you are trader trading with just one lot then please trade with financial stop loss, and if you are positional trader with capacity of more lots than take just 25% of qty what you trade, average on dips with tight stop loss of 8500. As of now charts are suggesting to go short only below 8450-8500 levels…period.

Nifty Weekly Technical Outlook for 18 Jan’16

Bumpy road ahead???

Passed two weeks remained superficial for hardcore bears and nightmare for bulls and current global as well domestic scenario clearly indicates that going ahead road is going to remain bumpy only-no smooth ride. As markets continued to slide down and down and ultimately Sept’15 & Dec’15 swing lows are also taken out. Now how far can we go, as I already started hearing about 6300 and few of my bear friends also mentioned about sub 5500 levels, do you heard that? Anyway it is common phenomenon, whenever such erratic moves happen you’ll start listening some extreme views from extremist, whoever it is Bear or Bull. In such turbulent times let’s see whether we should go contra or join the hands in existing carnage

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nifty weekly analysis 18 jan 2016

Nifty Weekly Technical Outlook for 04 Jan’16

2016 – Will you going to surprise us???

Markets always surprise us, don’t you think so? Up till 2013 nobody was sure where market is heading, and in March’14 Nifty gave breakout which was a like dream run for any hardcore bull, rally which continued for almost a year, and only ended in March’15 after clocking an all time high of 9119.20. In last 9 months from highs Nifty is down over 17%, but if we see couple of heavy weight stocks which are down significantly and trading near 52-week lows, so structurally there are lot of divergences. Rather delving into forecasting let’s see how objectively we can position our self in near future.

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nifty weekly outlook 04 jan'16

Nifty Weekly Technical Outlook for 28 Dec’15

Merry Christmas..Welcome 2016….

Last two weeks remained action pegged and I was not in position to update due to some personal commitments and also one of the reason that after looking at screen for long-long hours your body starts giving you a red signals, so I took some mandatory leave from watching screen. Rather making it long, lets keep it simple and see how to position ourselves in the coming week.

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Nifty Weekly Technical Outlook for 14 Dec’15

When Global worries, Domestic logjams dictate the market….

At this point our markets are majorly dictated by two major concerns, one we already know for long time now i.e. Fed Policy Rate Hike which they are postponing from very long period, and now it is almost certain that they may move ahead, and on the domestic front passage of GST Bill which Opposition party is not allowing to pass through. In the first case we are totally dependant and can’t do anything about it, but in the second case we can have some hope (although, very less). It is very difficult to comment that market has already factored in such news and worst is going to get over sooner then later, but rather let’s see what technical analysis is suggesting and how to position yourself in the crucial week.

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NIFTY ahead of Fed meet

Nifty Weekly Technical Outlook for 07 Dec’15

Moderate start..Unexpected end

Often when start is good (in our case it was moderate), expectation increases that everything is going to be as per plan, and when actually it ends in line with our expectations, it gives feeling of satisfaction, but when it does not fructify according to the plan then the feeling of devastation is much higher than feeling of satisfaction. Essentially my point is, in the beginning of last week when markets attempted to move higher, I thought it will move according to expectations, but on Wednesday market gave one shock and thereafter it took U-turn. According to my experience and understanding it becomes difficult for particularly traders to change their gears and take quick U-turn with market; I know many traders would agree with me. Let’s analyze and see how to place ourselves in the coming week.

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nifty outlook for 07 dec onwards

Nifty Weekly Technical Outlook for 30 Nov’15

Don’t be Intolerant in stock market…

Over the time people build preferences and they never realizes that when their preferences turned prejudices, rigidity or stubbornness. Similarly in the stock market people would like to call them as Hardcore Bull or Bear, in hindi we call them as Tejiwale & Mandiwale, like my friends call me hardcore bull. How these prejudices build over a time is the topic to discuss at a length, but over the time I understood that, as a trader or even as a research analyst you should not be biased by any particular view, at all the time you need to remain objective, that does not mean that you should not have a view, but acceptance of change is very much essential, and if we put it in today’s perspective then you should not be Intolerant with changing dynamics of stock market.

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weekly technical view of Nifty 30 Nov'15

Nifty Weekly Technical Outlook for 23 Nov’15

nifty view 23 nov'15

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Nifty Weekly Technical Outlook for 16 Nov’15

An uninspiring start of Samvat 2072…

Just ahead of Muhurat trading session Govt declared FDI bonanza which gave fillip to market on Muhurat Day, but that was it after opening gap up market remained moreover lackluster, so no opportunity to book some marginal profits and on next day we opened straight gap down. At the face of it for me it was very Uninspiring Start of Samvat 2072, but rather being superstitious I would prefer to stay objective, and look for another opportunity, that is what my experience suggest me. So lets analyze and see how to position our self ahead of expiry.

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samvat 2072 nifty weekly report

The week passed by…

In the last week Nifty formed candle like Inverted Hammer or it can also be treated as Doji, nevertheless it indicates that selling pressure at higher levels and all eyes would be on weekly low (7730.90).

Once again technical structure of NF is stands at crucial juncture and if selling pressure may intensify then it may drop towards Sept low 7540.

I prefer to look at 14-period RSI and on weekly as well daily time it is clearly indicating to me that we are in a bear trap of the market, however considering oversold scenario of the market possibility of minor pullbacks can’t be overruled.

CNXPHARMA now NIFTY PHARMA reached to an extreme oversold condition and after 2-3% further correction, I am expecting some sharp rebound in Index that is what price history suggest, so keep tight watch on this index and try to grab opportunity here.

NIFTYAUTO witnessed profit booking in last session, as AUTO stocks were performing better in compare to others. Chart structure indicates that after 1-3% decline it may resume to move higher again, however let’s see what damage it can handle.

One chart strikes to me is NIFTYIT which is likely finish its round of correction in the coming sessions, as like other charts after blip of 1-2%, I expect some smart rebound here, keep fingers cross.

Lastly, if you see NIFTYBANK it is still holds above its last Monday’s low, whereas NF already breached below this level, exhibiting divergence between NF & BNF. If this continues then chances of recovery in NF becomes much stronger.

Derivative Insights

In the month of Nov till date FII’s remained consistent seller to the tune of 3743 crore, whereas DII’s are net buyer of 2378 crore.

Week on week basis FII’s have reduced NF long position of 28k contracts whereas added 38589 short contracts. If we see in stocks, they added just 5449 contracts and stock short contracts are 21282. (In compare to previous weeks reading position are almost same, just the quantum has changed)

On the options front they maintain 1:2 ratio where 25309 option contracts are long, while 51411 puts are long.  And opposite to it 52746 calls are short and almost NIL puts are shorted. Above observation clearly indicates that till date their bias is clearly negative and for every one long contract they are creating 2 short contracts or may be hedging parallel.

8200 7,339,650 5,832,900 7700
8000 5,740,200 3,986,550 7800

On looking at NF options data maximum call interest lies at 8200 & 8000 strike price to the tune of 74 & 57 lac contracts. While maximum open interest in puts are at 7700 strike to the tune of 58 lac contracts and followed by 7800 strike 40 lac contracts.

Last week’s review – Technically, we are standing close to crucial support of 7850, so I expect any pullback towards these levels should be utilized for buying, don’t be so aggressive, but stay on long side, and on the upside 8120 will remain next resistance to watch for.  So, my expectations were thrashed by market –lesson I learnt is be objective, don’t get carried away by psychological expectations.

With fresh thought, current technical structure suggest me that we are standing near the junction, if bulls will fail to defend support area than bears will kick them in their next trajectory which opens big space for them. Level specific, NF has a support near 7670-7700 levels, if fails to hold above this level, then I think possibility of retesting of 7540 or moving further below can’t be ruled out. So until NF holds below 7950 levels I assumed to remain short in market, and start opening short below 7700 mark. Alternatively for Bulls to retain the confidence we need to close above 7950.

Nifty Weekly Technical Outlook for 09 Nov’15

Happy Diwali and Welcome Samvat 2072…

Diwali and New Year has always been a very special occasion for stock market and every market participants, and even for me. I would admit that today I am in market just because I saw Diwali of few punters in my society and got attracted towards market, (someday I’ll write about all those days). Samvat 2071 is going to end at similar juncture wherein from journey started-near to 8000 level, so statistically there is no gain or no loss year on year basis, but that is not the case, journey remained roller coaster, Nifty made a high of 9119.20 on 04th march’15 and made a low of 7539.50 on 08th Sept’15 and now we stand at 7950 levels. Let’s analyze what should be our strategy for near future.

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diwali report samvat 2072