After nifty, Banknifty index is the most followed index. On 19th of October we had recommended to go long on Banknifty with tgts of 10948/11200 which were easily achieved in November/December. Now time has came to book all longs for short time and Sell Banknifty. Ofcourse for long term investors its time to arrange for some liquidity as they will get a chance to buy some banks for time horizon 2-3 years. Fundamentally, as we mentioned in our last post on Nifty, we are expecting some rate hike in upcoming Monetary policy and also expecting FED to start tapering soon. Now coming to BankNifty Weekly chart technical’s, it has resisted at strong resistance line which was a support line last quarter. Secondly, A dark cloud cover pattern is visible on charts but not much valid as its not the clear top. Thirdly, the most strong theory which i follow Elliot Wave is showing some correction on the charts. Weekly, indicators have turned negative for the short term. Counting Waves, it has completed Sub-Wave 1 with as visible 5 wave Pattern. Now a correction Wave 2 with a-b-c is possible. We expected atleast correction upto 10720. At the most it could drop down to 10250 in near term.

Our Strategy: We recommend to go Short on BANKNIFTY (CMP:11366 cash level) with tgts of 10720/10260 SL:11750 …

*all level mentioned are of Index and not the future contract of Index

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