Category Archives: Nifty Bank

You feel enough for Banking Stocks?

Banking stocks are on a Dream run! PSU banks which were neglected by most of the traders gave whooping returns overnight on the news of Bank recapitalization by our Finance minister. After such a quick returns, you would be feeling its enough for Banking Stocks?… “I Believe its just the new beginning

Fundamentally many banking stocks are still reporting higher NPA but i think they are cleaning up its past mistakes. And as we know, market discounts future expectations, which is the reason supporting current rally on bank index. For the short term trend lets catch up with daily charts of Nifty bank where we have seen some breakout from consolidation pattern. As we can notice in the chart, Nifty bank index has moved out of “Rectangular Formation” which was intact since late June’17. During this formation, it has triggered a start of Wave 3 of a smaller degree of trend which has now support at 24800 with minimum tgts of 26000/26320  on the upside. Indicators are also moving with a strong strength for a new high. Now for a quarterly view i feel 24300 is the maximum downside where we have a gap unfilled and 20 day Moving average support.

So view: Hold existing longs on Nifty bank with tgts of 26000/26320 or buy fresh near to 25000 in near future with stop loss of 24300.

Is Doji Indicating a false breakout?

Nifty managed to close above 9500 for the second day which made some traders over confidence for some more long trades…but STAY CAUTIOUS! In my last post (Range volatility expected but find sector specific moves) i mentioned to WRITE  9200 PE and 9500 CE , surely you might be in loss for M2M in CE writing but wait.  Open interest data is still suggesting a strong resistance at 9500.

To support our profit booking view for near term on Nifty, today on daily chart we have got a Doji candle which is a sign of pause to current trend. It has got more significance today as it is at the high of current trend and also indicators are in overbought position. So what could confirm its role of reversal???…”Candle Tomorrow” ! Watch out for Opening of Nifty, if its below  9517 and we dont pinch a new high, there are 70% chances that we could get a reversal sign on close tomorrow.  May be i would consider last two sessions close as a false breakout for short term traders.

On other side if we look at global markets, they are already showing signs of weakness since last two sessions and also bullion markets are in strong short covering move which is a sign of Equity market reversal. So strategy would remain the same on Markets as last post:  writing calls on Nifty and going short on Nifty Bank! 

Happy summer trading with strict stoploss!

Range volatility expected but find sector specific moves!

After a long time got something to write for Nifty as until last week we were trading strictly in the range of 9000-9360! Finally, this week we got new high 9450 and managed to get life high weekly close. Banking sector was leading markets with PSU Banks outperforming as i had predicted on 25th April in my post “Still some more time to have trust in PSU Banks” ! But now i feel for short term things are turning around.

After a massive rally in Banking stocks , now we have started getting some negative news from banking companies such yesbank’s AGM report, weak mid-cap numbers and many more.

As we can notice in daily charts of Nifty bank above, index has weakening momentum. RSI has already given bearish crossover on its average which is the first sign of weakness. Secondly, two consecutive bearish candle’s on the top are also support profit booking view in coming months. The Blue Box marked is the area of trading until May expiry which suggest that now Nifty Bank could be volatile in that range of 22000-23000. So avoid any long trades as of now because we are near to the higher range. Can look out for stock specific short term selling in Banking Counters.

Where we can expect strong profit booking in Nifty bank with almost 1000 points, on other side, Nifty is expected to be volatile with profit booking on Nifty bank to be balance by IT and to some extent Pharma sector. 

As we could notice in the nifty Daily chart above, we broke out of consolidation range of 9000-9380 last week and now we have widening range of Nifty to 9250-9500 for the rest of the series. One steep fall to 9280 could be expected but we should hold around 9250 as still weekly momentum is expected to be strong. 9250-9280 has lots of support factor like 20 days SMA, trend line support stretched from 9th Nov low and Open interest support. So as a trader i would short Nifty for few session with sl at 9500 while as a investor would wait for 9250 to park my liquidity.

Then what could counter balance Index and Banking fall?…….. IT Sector….

IT sector as noticed in the above weekly graph was in a strong down trend since start of the 2015, as in the white channel. But now new weekly upward channel (Blue channel) has taken a lead which would mean now IT stocks could outperform. Already in last week we some signs from TECHM IT leading markets ahead. So be Long as a trader in next week

Which could be other sector to watch out? …Pharma Sector.

Pharma sector has been most under-performing after IT sector since 2015 where our pharma companies have been under USFDA scanner. But now things are looking to be cooling down and worst seems to be have discounted in pharma sector. NSE Pharma index is at 9 years support which is 200 Weekly average as represented by yellow line in graph above. So still strong momentum hasnt build up which could confirm long positions but we can start accumulating pharma stock as we could expect sharp surge anytime in next 3 months. Start scanning pharma counters.

So strategy now for public participants:

Nifty Index: Write 9200 PE and 9500 CE 

Nifty Bank: Write 23000 CE and Buy 22500 PE with stop loss at 23200

IT Sector: Be long on INFY (tgt 1000) and TECHM (tgt 460)

Pharma sector: Accumulate Sun Pharma and Mid cap pharma stocks.

Read disclaimer on kushghodasara.com

Still some more time to have trust in PSU Banks

Markets had been pretty range bound since the UP election results were out in mid-march, but finally we gave a breakout today and closed at new life highs. Who has led the breakout? Banking Sector! So lets talk about Nifty bank in my today’s post.

As we all could notice in the Daily chart of Nifty Bank, we are about to give a breakout from a Channel.  This was a long channel with a time wise stretch of almost 3 months starting from Early February which is on the edge of rally breakout tomorrow over 22140 on spot level.  Banking stock has been in good momentum since last 3 weeks but who could lead breakout in Nifty Bank? PSU Banks……………..!

On MoM rally which we got on nifty bank from almost 16000-22000 was lead by private sector banks like Indus Ind, Yes Bank, HDFCBANK, Kotak bank and just one PSU Bank SBI. Other Mid-cap and PSU Banks were lagging rally due to NPA concerns. But as we have already seen banks following Swacch Bharat on their NPA’s, we are getting attractive deal on Risk: Reward for long term on such banks. I Had been pretty much avoiding trades in such banks but now i would surely keep them in my watch list for trading purpose.

Lets check out PSU Bank Index

So when we are witnessing Niftybank closing above its own high of 2015 , PSU bank index is still far away from 2015 high and then we could think of it catching up with its own private peers. As we all could notice in weekly chart of PSU Bank index, we have almost witnessed a inverted h&S bullish reversal pattern. This clear suggest that we are going to get some good medium term trends from PSU Bank stocks. The index is expected to kiss 4800 from current levels of 3540 from pattern breakout. So any dip in quality PSU bank stocks is a buying opportunity for 6 months.

Strategy: Buy stocks like Bank baroda, SBI, Andrabank and mid-cap bank like federal bank for a 6 months time with stop loss on PSU Index at 3270 

Nifty Bank approaching “Line of Control”

Nifty Bank has seen sharp short covering after under performing in the month of December. Prior to December it had out-performed ..So during this Rock-n-Roll one level which acted a pivot was 19068 as marked horizontal in the graph over which Bull’s will get control over the markets. 

13th_jan

So as we could all mark that since last July, 19068 level has played role of resistance-Support and now we are again approaching the same. But this time its more crucial resistance because we also have 100 day SMA at the same level. From the Derivative markets also we have got highest open interest at 19000 mark which may be a small resistance.  Even a dragon fly Doji on daily chart suggest that bulls got back control at the end of the day. Even indicators are showing strong positive momentum which is giving me more confidence of probable breakout over 19068.

Now getting to Wave Theory, we have started a Wave B corrective move against a larger corrective Wave. Looking at a primary level, i conclude that we may get a Flat formation to larger wave which means this rally has all chances to kiss 20000 mark soon. Even post 19000 we have all resistances around 20000 which means 70 points move away from close today would trigger fresh buys for traders. Investors should still remain stock specific in Bank Sector as still many PSU’s are announcing willful defaulter which may have strong impact on profits in coming quarters. So Strategy would be simple to go long on Nifty bank with Stop loss of 18600  targets 19450/19960.

 

A bit more before a breakdown?

In recent past, Nifty has been quite volatile but Nifty Bank Index has shown some steady growth from 18900 to 19700 levels. One common characteristic of charts of both nifty and nifty bank is that both are channeling in downside direction and have closed exactly near to resistance line yesterday. Now what next?? Surely havent yet got any confirmation for more upside on Nifty but a slight more upside could be witnessed on Nifty bank charts.  As per my Wave counting, we are still into a corrective Wave but we can witness a reaction move in upside direction and Nifty Bank could outperform during this reaction as its about to move out of the channel

22cd_oct

As we even look at some other factors, say Indicators, they have also given a positive crossover from the oversold zone indicating a short covering. Secondly, Nifty bank has taken strong support on 50 day average giving a sense of bulls momentum for near future. Thirdly, Option writing is suggesting resistance this expiry around 20000!  But traders should take position in next expiry with target of 20233 in mind where probability of Wave ending is expected!

Strategy: 

Safe Traders: “No Trade until Clear sign”

Risk Traders: Buy with tgt 20230 SL: 19450

Rd disclaimer before investing on my view!

 

Rate cut expectations to give relief Rally

Banks Tanked like hell last week and i hope you guys earned full of it as i intimated the same on 23rd Sept in my post:  Banks are About to Tank! Though my downside target 19200 was achieved easily but thats not the end of downside rather its just the beginning. Nifty Bank breached a upside channel on weekly charts which was intact since february low and we have closed below the same today giving a strong confirmation to previous two Gravestone Doji. 30thsept_1Surely looking at above charts we will get biased towards getting our shorts on cards but before than i feel we would get a short covering on daily charts. Looking at indicators on daily chart, banks are too oversold and it should get some upside before going down more. Banking policy next tuesday is expected to give rate cut  and much need short covering markets but that could only sustain temporarily as i feel this cut is already discounted since long.

30thsept_2So may be we could see some positive moment if we get rate cut better than expected but then strategy would be Sell on News  rather than buying fresh.  On upside 19750 is strong resistance for short term while 19900 would be my next level to short.

Strategy:

Buy 19350 CE Nifty bank with tgts of 19650/19850 SL: 19100

Banks are About to Tank!

Markets had been quite volatile this week on various statement awaiting from BoJ and FED but still Index charts are looking weak as i explained in my last post on Nifty. Though we have seen strong stock specific buying in Mid-cap sector and some front-line stocks too but the main pillar of Indian markets, Nifty bank (Bank Stocks), have started showing signs of under-performance in coming weeks. We saw trigger first from Yes Bank, followed by Indus ind bank to some extent and the main culprit born this week was Axis Bank. Looking onto PSU Banks , if you look at SBI counter, it has been resisting strong at 260 CE were we are witnessing strong writing. So overall Stock specific banking stocks are looking weak. Even if you look at Nifty bank options, we have been witnessing strong writing at 20000CE but on the downside writing for this expiry is still at 19500 PE which gives me strong feeling we could get that next week with furious fall. Coming to chart below, its weekly chart of nifty bank.

29_sept

If we look at the channel which was intact since the low on Budget day, we are closing near to downside support line of channel for almost 6th time but this time is fearful! Why? …We have got 3 bearish candles for last 3 week…Inverted hammer …Gravestone Doji…..Gravestone Doji….!! So if we trade below 19760 spot level next week, it could be Trend Reversal for medium term…indicators are already turning bearish….So i would be recommending sell on rise on Nifty bank…with stop loss at 20300 …Target …19200!!! 

“Bank” your profits!

Nifty banks has given tremendous run in recent time and has out-performed Nifty in last two expiry. Stock specific movement in banks had led this divergence. To take some names, PSU Banks gave a strong short covering on weekly charts after two years of under-performance until Budget day this February. Still many PSU Banks are showing signs of a good move next week but Nifty Bank index is approaching channel resistance near to 20100 spot level. So may be those who had longed this expiry could profits around 20050 while start fresh shorts above 20100. Options data is suggesting strong resistance as of now around 20100 levels.

3rd_Sept

Strategy for Next week: Book Longs near 20050 and Sell on rise above 20100 with Stop loss of 20250 for rest of expiry

Banking stocks may underperform!

Nifty has been quite volatile these days and it has almost achieved my target of 8720 before 2 days but now we are not getting any clear sign of trade on either side. But Nifty Banks index is showing some pattern on daily chart which is an upward slopping channel as marked in chart. But currently we are into ebbs of major trend wave which means we are into some profit booking. Stock specific trades in banking are still looking good but index may weaken to lower channel support which comes around 18150. May be its risky to have a naked position so may be i would buy a 18600 CE and 18500 PE and stay safe until expiry. So next two sessions remain crucial for stock market but would recommend to have a safe strategy to traders