Nifty & BankNifty Analysis — 24 Apr 2024– Neutral and Out of steam, what is next?— PostMortem Series Q1 FY2024–25
Nifty Analysis — Stance Neutral ➡️
Recap from yesterday: “For tomorrow we wish to start the day with a neutral stance and look for bullish opportunities as soon as it reaches for the 22519 levels.”
Another flat day, but the options premiums were not behaving as usual. The blame may be on VIX as the premiums were dead low that even a small 50+ points move created a huge skew between the Put and Call prices. India vix staying @ 10.2 levels is not a good sign for professional options traders as a small move will upset the premiums.
A better alternative is you use spreads like credit/debit spreads — buy a strike, sell strike+1 etc, so that the premiums move in tandem and the volatility contraction may not impact that much. But I assume most of the Algos may not have spreads as the core strategy, to begin with.
For tomorrow, we wish to maintain the neutral stance and look for bearish opportunities if 22295 is getting broken. If the index moves up, 22519 would be our first level to watch for.
Algos ended up gaining Rs5496 today.
BankNifty Analysis — Stance Neutral ➡️
BankNifty also had a neutral day today, but the OTM options premium was so weak that I did not play expiry at all today. I frankly do not remember the last time I missed playing BN expiry day. The regular algos, which has the same logic for banknifty every day ran as usual and that is the only trade I did on BN today.
NiftyIT was totally against BankNifty today, the split showing its impact on Nifty50 (in a way helping its neutral case). But looking at the price action, BN was not able to generate any momentum to go for the next levels.
Even though the chart says there is further upside momentum left, the fundamentals may not really help BN this week. The news of RBI banning Kotak from issuing new credit cards broke after market hours (source). If the news came during trading hours, the BN would have expired at a different level altogether — but the news would have priced in and things would have settled. Now, we may have some push/pull for the price discovery tomorrow and it could really drive up some volatility. We would still prefer to maintain our neutral stance and go short only if 47465 is getting broken.
BN algos made 28600 today and I exited the trades by 13.15.
Intraday Algos run via AlgoTest on Kotak
Webhooks automation run via TradingView on Dhan
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