Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
Charts & Analysis

Bank Nifty Trade: Stopped Out But Half Only

In the MarketVision Chronicle, I’d mentioned a Bank Nifty trade with a stop loss of 11,000 (the 50 DMA). The Bank Nifty crossed it yesterday, and I realized that the stop loss was too close – just 1% away from Friday’s close.

Nevertheless I have exited half my position, and left the remaining on towards a more meaningful level, the last high at 12,000. Technical points to watch are the 200 DMA and the MACD turning over the zero line.

I got lucky, in a way – a couple of meetings yesterday didn’t allow me to trade, which is just as well, as the markets opened negative today and allowed me a better exit.

Bank Nifty Chart

None of the fundamental parameters have changed. That is, there continues to be weakness, on the back of high inflation, slowing growth, worldwide turmoil. So this trade may be more valid when the technical strength ebbs. People say it is short covering or fresh buying or whatever – but I honestly don’t know what is real buying and what is short-covering. Remember, FIIs bought more than 1,400 cr. yesterday, which is something they’ve not really done for a while.

Game changers: it looks like the Greek parliament will pass their austerity bill. Regardless of protests,  That should provide a fillip to bank stocks worldwide, and Indian stocks will go up alongside. The other thing is if oil prices continue to go lower (Brent is still above $100) and the monsoons are good, we might see a reversal in public policy towards inflation. (I mean public policy, not that inflation will fall; basically the good folks at RBI and govt. will ignore current data and rest on the belief that inflation will come down in future, and they will again be proved wrong, in my opinion)

  • Sachin Advai says:

    Hello Sir
    But Buying BankNifty would be a better thing around 10500-10600 levels bcs 10560 was the Closing High in 2007 , What is your Opinion ?
    Regards
    Sachin

  • deb says:

    Deepak,
    I think government is not ignoring situation due to inability but due to the rich connection with real estate Mafia.RBI has many agents from govt. . It is very difficult to break the unholy nexus. RBI is not really independent under current governor as it was under last one.
    Thanks