183 Days Of Post-Mortem On Bank Nifty

Contents

What to expect from this book

Acknowledgements

Daily reports from 29th Mar to 4th July in reverse chronological order

Request you to use a simple search by the date to jump to that particular day’s report. For e.g.: search like 17 Feb 2023 to jump to view the post-mortem of 17th Feb.

What to expect from this book?

This book is a compilation of 183 days of daily-journal for trades conducted on bank-nifty index. Bank nifty is a stock market index that tracks the share prices of the major banks in India. 

10 best banks together account for 97.37% weightage on banknifty index. And the top 6 banks account for a whopping 88.67% weightage. See more details at NSE website

India’s economic system is heavily dependent on banks unlike the developed countries like US & Europe. Even though our country has listed agriculture, industries & services sector as the top GDP contributors — it’s actually facilitated by financing.

According to me the real tick in India’s economy can be monitored with a higher perfection if we track the Nifty-Bank index rather than Nifty50 (which houses 50 top companies in India). The truth is financials account for 38% weight on Nifty50.

I trade on bank-nifty options almost every single day. 95% of the trades are intraday with no particular intention to carry forward overnight. So I started maintaining a daily journal to record the trades I took and the rationale behind them.

After a while I was finding it difficult to keep track of this offline journal — so I thought to publish the same on a blog. Since I am not a SEBI registered analyst I cannot & should not give a false trade recommendation. Hence I have tweaked my report to be a Post-Mortem rather than a prediction.

My attempt is to logically reason why & how something happened in the day. An explanation in simple language & depicted via markers on charts, candle sticks etc.

I am also careful enough not to expose my directional bias that may otherwise lure traders get into positional trades. Options trading has a high probability of running into losses if we lose focus. So the strategies are explained after the day has ended for educational purpose only.

This book is a collection of 183 days of trades that happened between 4th July 2023 to 29th March 2023. 29th March marked the end of weekly, monthly & FY22-23 series. As you are aware the expiries of a series happens on every Thursday. Since 30th March fell on a holiday, the expiry was on 29th. And that’s why it makes sense not to include 31st March’s report in this volume.

On 2 or 3 days in September i was unable to create the journal as i was travelling. For the rest of the days i have spent close to 30 to 40mts per day in creating & publishing the report.

So approximately 120+ hours has been spent in creating the analysis & report in addition to the 6 to 7 hours spent daily in reading the charts. The daily reports are published at https://viswaram.com/

Since this is my first attempt to create an eBook, the current version is approx. 600 pages long. Going forward I will compile the eBook once every quarter — which will be easier to read. This book is priced at Rs99 – which means you will have to spend approx. 50 paisa per day’s report.

I hope this book will serve as a reference point for your educational journey into Indian stock markets — especially on bank nifty. Since the chart patterns of each & every day is recorded in the report — it may also help you to look up for data when back-testing.

Happy reading !

Balachandran Viswaram

Acknowledgements !

I always wanted to become an author, back in 2008–09 I used to blog once every week. In 2010 I wanted to get into business of my own & had shortlisted 2 specific industries

Stock market

eCommerce

I started with the stock market first & registered as a sub broker to a leading broking company in 2010. But then I decided not to pursue further and instead go with eCommerce firm. 

The reason being stock trading & related business will not really help the society. Whereas if I get an eCommerce firm it will impact a lot of people in a good way — customers, employees, vendors & logistic partners.

My business was going on quite well until the Govt. of India declared the lockdown. Due to a sentiment shift the products were not moving as usual and what was once a 14 member company is now on the verge of bankruptcy.

I would like to thank the government to have imposed the lockdown which came as a wake-up call for me. If not I would have been on a self-destruction course with literally no time for self, family or friends. The average salary I drew from 2010 to 2020 from my business would be less than Rs5000 per month & I had to rely on my family for other daily expenses.

I had put the service mindset ahead of profit taking into the ecommerce business. In fact our net sales commission was around 3 to 4% whereas Govt. was making 5% as GST. Unless for the lockdown I would not have known the reality that I am in a collision path.

Once the ecommerce business came to a standstill in the 4 to 5 months of lockdown, I got some time to rethink my plans for future & thats when I thought of brushing up old skills I had acquired in 2010.

So from 2020 till date I have been able to actively trade & earn via stock markets. The profits I got from trading was channelled into the ecommerce firm saving it from an otherwise certain collapse.

Bank Nifty Today — 29 MAR 2023 Post Mortem & Weekly/Monthly/Yearly Expiry Analysis

Quite an eventful day today spoiled by the last 30mts surprise. Honestly how many traders were expecting a rally of 340pts between 15.00 to 15.30 — i was not. In fact i was expecting a fall towards the 39400 levels.

Let’s analyze the trades on the 5mts chart today. Open was in line at 39611 and we tested the resistance level of 39742 in the opening minutes itself.

We spent an hour at this support/resistance zone before breaking out. Although the break was temporary.

At 10.20 i posted on banknifty minds "$BANKNIFTY 39744 if it breaks will give a good push to CE option premiums hoping so !"

BANKNIFTY Index Charts and Quotes - TradingView - India

TradingView India. View live NIFTY BANK chart to track latest price changes. NSE:BANKNIFTY trade ideas, forecasts and…in.tradingview.com

The rationale of the breakout would be due to the strength bank nifty showed defending lower levels in the opening hour. This would have prompted CE shorts to cover their positions at profit/loss. Why am i saying this — i covered mine at a loss well before 10.00.

The candle at 10.20 made a surge of 109pts ensuring 40000 CE jump 171% in the same 5mts. During expiry trading — option buyers are looking for these kind of opportunities & the sellers running away from it.

This spike above the resistance did not last that long and we reverted to the mean level in some time. The next 4h 35mts were spent between 39668 & 399913 with no directional bias.

At 13.47 i felt that bank nifty will fall below the SR level looking at the price action and posted this "$BANKNIFTY struggling to go up even after the resistance breach for me thats negative !"

BANKNIFTY Index Charts and Quotes - TradingView - India

TradingView India. View live NIFTY BANK chart to track latest price changes. NSE:BANKNIFTY trade ideas, forecasts and…in.tradingview.com

From that point till 14.55 my analysis was going in the right direction. I had also taken a bearish bet of 39400/39300 debit spread to capitalize my view (which went to zero at last).

Honestly i was not at all planned for the last 30mts move. A surge of 343pts in 30mts that too with huge volumes.

"$BANKNIFTY sorry had no clue about this last 15mts candle with exceptional volume spoiled the party !"

BANKNIFTY Index Charts and Quotes - TradingView - India

TradingView India. View live NIFTY BANK chart to track latest price changes. NSE:BANKNIFTY trade ideas, forecasts and…in.tradingview.com

What the last 30mts did today was to give the 15mts TF a new bias change, all of a sudden the chart is now not looking bearish at all. If we take out the next resistance the chart will go bullish too.

1hr TF shows a W like pattern forming, if we take out the next 2 resistance over the next 3 to 4 sessions — then the chart will lose its bearish view and go back to the range based territory.

The volumes on the major banks in the last 30mts which caused a huge surge in the prices may have been year-end rebalancing or expiration trades. There are big institutions that take bets even for a year, for e.g.: the positions for closing of FY22–23 series would have been taken in FY21–22 itself. Since today was the last day of the fiscal series (expiry today).

See the cyan markers for the unusual volumes in 6 bank nifty stocks.

Bank Nifty Today — 28 MAR 2023 Post Mortem & Analysis

March series is coming to a close tomorrow, but the options premium is already dead.

Only few strikes near the money has some more premiums to shed, all the other OTMs are well below the average rates to what we usually see on the penultimate day of expiry.

It also translates into very little movement expected tomorrow. Well today was an inside day — we did not even swing as much as yesterday. Yesterday was another range bound day too. So consecutive range bound days has taken the air off the PE & CE options.

Bank nifty opened at 39545 gap up to yesterday’s close but almost half-way to the last hour swing of yesterday. And then we started trading with no special emotion today.

We were stuck in a range of 39340 to 39560 till 15.20. There was one candle at 15.25 that just broke out of this range — but again not something that important too.

One of the reason of a flattish trade would be attributed to the Finnifty expiry which is generating a lot of volumes now. The stock manipulations required to keep the Finnifty index range bound is active.

The only reason i haven't pursued trading on Finnifty despite its similarity with banknifty was because of the HDFC-HDFCBK merger event. HDFC is the main contributor to Finnifty’s weight outside of the 5 main bank thats supporting banknifty.

After the merger, both the index will have 85 to 90% correlation, the only difference being the scale to which its set to.

Tomorrow’s expiry may only become interesting if we have any news event in US or Europe markets today. Otherwise we are quite starting at a boring range bound trade tomorrow.

The range bound trade continues in the 15mts TF. At present we do not have a directional bias until one of the support or resistance gets broken.

1hr TF has not lost its bearish bias yet, according to me the next leg of lower low is in the making and probably its taking some time.

On bank nifty minds i made 2 posts today

$BANKNIFTY need some triggers or news flow to break the range trade at present non-directional trade seems like working at 10.10

BANKNIFTY Index Charts and Quotes - TradingView - India

TradingView India. View live NIFTY BANK chart to track latest price changes. NSE:BANKNIFTY trade ideas, forecasts and…in.tradingview.com

and

$BANKNIFTY option premiums are all dead ! not even a fake move today to fire up the premiums Finnifty is making an impact over last 4 expiries at 13.59

BANKNIFTY Index Charts and Quotes - TradingView - India

TradingView India. View live NIFTY BANK chart to track latest price changes. NSE:BANKNIFTY trade ideas, forecasts and…in.tradingview.com

Bank Nifty Today — 27 MAR 2023 Post Mortem & Analysis

There are few important aspects to the price action today. We stuck to a small range today — it would have been good for intraday straddlers & short iron-fly, iron-condor strategy deployers.

So we opened in line at 39484, many would argue that it was a gap up. But i wouldn’t say that because of the price action from the previous session.

As soon as we hit the last session’s swing low, we got a bounce of 270 pts, but this did not sustain and we fell back to the same low point.

We had a second bounce of 268pts between 11.30 to 12.45 & as expected this did not sustain as well. and fell back to the low point of the day again.

Now between 13.25 to 14.35 we had the 3rd bounce of 383 pts & again we could not breakthrough the 39742 level. And we fell back to the low point of the day.

The important aspect in today’s price action is we had 4 tests of 39300 levels today (see cyan markers from chart). And none of them gave away.

I am not saying that it’s a bullish sign, but it’s an area of importance. Either the volume traded today might be too low to create any volatility to break this zone or we may need some external triggers to break down.

On banknifty minds i made 3 posts today

$BANKNIFTY we need a break of support 38690 for strong bearish momentum at 10.14

BANKNIFTY Index Charts and Quotes - TradingView - India

TradingView India. View live NIFTY BANK chart to track latest price changes. NSE:BANKNIFTY trade ideas, forecasts and…in.tradingview.com

$BANKNIFTY option prices are not providing clear direction at 13.39

BANKNIFTY Index Charts and Quotes - TradingView - India

TradingView India. View live NIFTY BANK chart to track latest price changes. NSE:BANKNIFTY trade ideas, forecasts and…in.tradingview.com

$BANKNIFTY needs to take out 39742 to go bullish at 14.39

BANKNIFTY Index Charts and Quotes - TradingView - India

TradingView India. View live NIFTY BANK chart to track latest price changes. NSE:BANKNIFTY trade ideas, forecasts and…in.tradingview.com

15mts TF is looking at a sideways movement, i was hoping was a retest of 38690 levels today — but that did not happen. Instead the 39300 level came to rescue. I am seriously considering to mark a new SR zone at 39310.

1hr TF is still bearish to me, agree it’s taking some time for the new leg to form. If there are no fundamental news triggers i am expecting the 38690 levels to be taken out this week itself. Keeping my fingers crossed

Bank Nifty Today — 24 MAR 2023 Post Mortem & Analysis

Traders expected a bullish day today. They cannot be blamed because on 22nd we had a solid trade day above the crucial support level of 39742.

But something was certain, once we broke that level yesterday we should really look out for bearish opportunities not the other way around. The level of 39742 became so important because of the time spent in the range ~ 45 days.

Thats why at 09.29 i posted this message on banknifty minds "$BANKNIFTY as long as 39742 is not broken there is no point in going bullish it could even trap us!"

BANKNIFTY Index Charts and Quotes - TradingView - India

TradingView India. View live NIFTY BANK chart to track latest price changes. NSE:BANKNIFTY trade ideas, forecasts and…in.tradingview.com

Open was in line at 39555 and then we spent 2hrs without any specific directional moves.

Then there was a steady rise to the resistance level of 39742, must say a rise of 256pts and then an expected rejection.

From 12.25 to the close there was a steady fall of 465pts ~ 1.17%, it did not come as a single leg. There was a pull back from 13.00 to 13.15 wherein we retested the resistance again.

Today’s fall may not be entirely technical — there were lot of fundamental news flow related to taxation & passing of finance bill that created some uncertainties.

Govt. plan to raise the STT, remove the indexation benefit for debt mutual funds was not taken positively by the market. There is something unusual about the finance bill passed today — it comes 52 days after the Union budget was presented.

During the budget there was no mention of revision of taxation, removal of long term capital gain etc. They might have felt that releasing those news then would have crashed the markets. But the sad thing is that they took us for a ride now.

The reaction we had from the stock market today was nothing compared to the impact of revision of tax structures. If Govt. doesn’t allow grandfathering i.e. people who had already got into debt funds before 31 Mar 2023 to enjoy the indexation benefit — then we are in deep trouble.

Coming back to bank nifty, we closed at the low point in the day and like yesterday the selling intensified in the closing hours thereby restricting the real damage.

We can look forward to have an eventful next week !

15mts is not showing an immediate direction, it will show bearish bias only if the 38690 support is taken out. Just because 39742 is broken the sentiment cannot be bearish because banknifty has spent time below 39742 without causing a damage earlier.

1hr is still continuing to look bearish, but the momentum will intensify only if the next support level is breached. If things go as per plan we may be able to see it before March series end.

Bank Nifty Today — 23 MAR 2023 Post Mortem & Analysis | Weekly Expiry

Interesting price action today, not only did bank nifty end 0.96% down — it broke the crucial support of 39742 today.

You might be already aware that i was expecting a bearish week, the 39500/39400 4:5 debit spread of mine was sitting at a loss right from monday. Today’s gap down opening at 39836 gave me some hope that we will have a miraculous down day.

The handout from US markets yesterday was completely bearish S&P500 lost 1.03% in the last 15mts of trade. So it is just common sense that we expect our markets also to trade negatively.

But what happened was totally unplanned for, banknifty took support at 39742 by 09.25 and then started rallying up. We had a 1.18% ~ 468pts rally from the LOD to HOD by 12.45.

And usually when markets move upwards, the options premium drops equally fast. Volatility cools & more people join the party as bullish rallies are easier to participate.

By 12.46 i took a debit spread of 39800/39700, i am not here to brag how much money i made. In fact i am going to show you how much i lost. So now my hedge has 1 debit spread and 1 debit ratio spread — but i was not finding any OTM puts unusually priced. All of them were already near the fair value.

The cyan coloured solid line is where my debit spread will go in the money. At 12.46 bank nifty was at 40200, i was expecting a rejection from the resistance level of 40131. Honestly i never thought my debit spread will even go in the money.

Normally i take debit spreads to hedge for the naked options that are sold. But today i took the spread first and then thought will take the short position once the market starts dropping.

The resistance rejection came at 13.40 and then there was a strong down move. But it was already late, we hit the blue line by 14.30 and with just an hour to go for close. So when i saw the 2nd candle at 14.35 i thought that bank nifty may not fall further, it was already at 39799 and then the support is just 50 pts below.

My intuition told me bank nifty will bounce back from the support level and if that happens my debit spread will go worthless (to zero). So i squared off the position right away making a return of 7.6 times the premium paid.

Guess what happened next, between 14.40 to 15.10 bank nifty fell another 273pts ~ 0.69%.

Once it broke the support line, the single 5mts candle itself swung 147pts. And guess what my position would have made an additional 25.7 times the premium paid.

7.6 & 25.7 times means 630% & 3074% respectively. Now these are the one-off lottery deals that come up. The mistake i made was to think the time factor will get in the way of delta increase.

So now on the 15mts we have broken the support level, the red candle right after the break is showing some signs. Also notice 8 consecutive red candles.

Bank nifty lost 1% in just the 1hr candle at 14.15 — this is the candle that broke through the support level. Further price moves are going to get exciting & i would like to see the next support level of 38690 to be taken out before the bearish momentum continues.