So, the BankNifty closed below the gap fill zone, but the US markets were up yesterday, and this could provide some motivation for the bulls in India.
Even if it does, it could be short lived. First, there's another larger gap below that needs to be filled, second, the HDFCBank (merged entity) is going to be replacing HDFC on the indices. The weightage will also have to be adjusted, and consequently so will fund managers have to adjust.
I understand the weightage will be 15% in nifty, and 30% in bank nifty. But there is a limit on each, and some rejigging will take place.
As pointed out in our first chart, there was a possibility of breaking the trendline, which it has done. We'll have to wait until the end of day to see if it will hold though. If it breaks below the line, that means we could possibly fill the lower gap soon.
The market is staying within a tight range, 45100 <> 44900. And it's been slowly trending down. I'm curious to see wether this current position will hold. We have a volume profile control line around 44900, which is the make or break. Break it, and we see further downtrend.
The BN is trying hard to break the 45000 level, which is a key level (from what we saw yesterday as many straddles were formed around that level). Will have to wait till 3 pm to see whether this is sustainable move up or a bull trap. (Personally, it looks like a pump & dump)
Seems like multiple indicators are pointing to downtrend on BN.
And so we have the start of the correction...
Closing below the previous day low is going to be very bearish.
And it seems like we closed just below the trendline again!
I don't like saying I told you so, but I told you so (check the first comment at the beginning of the day). Now, I hate being right or wrong. More importantly, are we making money...