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Daily Market Analysis 31 Jan 2023 Tuesday

Market Structure : Bearish / Sell on Rise

Nifty Analysis :

1. Nifty made a new low today and closed higher.
2. Nifty is in a Trend Channel,
   • It touched 3 times upper band
   • and touched 3 times lower band.
   • Is Nifty going to touch the Upper band once again? (Read the last point)
3. Nifty may retest the breakdown level once again (17800).
   • Currently that breakdown level is at 50% Fib Retracement level.
   • So there is a high probability that this breakdown level may be tested.
4. Nifty is clearly in Short Term Down Trend,
   • If you want to know more read Nifty Long Term View.
5. In one or two weeks time. As per my technical analysis, Nifty may retest these 2 levels
   • One is 17900 level.
   • Another one is 18100 level. (This is almost upper band level)
   • It may seem difficult to achieve. But you should remember one this, Anything is possible in stock market.

Nifty Weekly Options Data :

1. Option Sellers are maintaining 18000 calls heavily.
2. Put Call Ratio is at 0.57 which is bearish sign.
3. After 18000 call, highest OI is at 17000 Put.
4. Nifty ATM straddle premium is at 360 points.

Nifty Monthly Options Data :

1. In Monthly options, Option Sellers are holding 18000 short straddles.
2. After that 17500 Put has highest OI,
   • So that means option sellers are expecting 17500 Put will be a strong support till month end.
3. Put Call Ratio is at 1.23, which is slightly Bullish.
4. Nifty Monthly ATM Straddle premium is around 630 points.

Bank Nifty Analysis :

1. Bank Nifty made a new low and closed higher.
2. Bank Nifty almost achieved the target of Bearish Descending Triangle.
3. Bank Nifty’s breakdown level is at 61.8% Fib Retracement.
4. As per my technical analysis, Bank Nifty may retest these 2 levels in next few weeks.
   • One is 41800 level
   • Another level is 42750
   • I know, it seems very difficult to achieve these levels at current market sentiment.
   • But you should remember one this, Anything is possible in stock market.

Bank Nifty Weekly Options Data :

1. In Weekly Options, Option Sellers are maintaining 42000 calls
2. After 42000 calls, no important support can be seen on Put side.
3. Put Call Ratio is at 0.49, which is bearish sign.
4. Bank Nifty ATM Straddle premium is at 1050 to 1100 points.

Bank Nifty Monthly Options Data :

1. In Monthly Options, Option Sellers are adding short straddles at every 500 points distance.
2. Majority of the OI is created at
   • 42000 Short Straddles with slightly higher calls
   • 40000 Short Straddles with slightly higher puts
   • 41000, 41500 and 40500 strikes has almost same level of puts and calls
3. Put Call Ratio is at 0.89, which is slightly bearish for month end expiry.
4. Bank Nifty Monthly ATM Short Straddle premium is at 2000 points.

Final Thoughts :

1. Nifty and Bank Nifty are clearly in Bearish Trend
2. Nifty and Bank Nifty may retest the above mentioned levels as per my technical analysis
   • At least one of those 2 levels from Nifty and Bank Nifty will be touched in next few weeks.
3. Bank Nifty target achieved for Bearish Descending Triangle.
4. Nifty target not achieved for Bearish Descending Triangle Pattern.
5. Nifty is trading in Trend Channel.
6. No important levels for tomorrows trading.

Day’s Recap :

1. This selling zone for Bank Nifty posted in Yesterday’s Daily Market Analysis, worked out very well today (see image below).
2. It achieved 1:3 after entering short trade, that is the target I planned.
3. After that tried one more trade and it triggered the SL. Here are the details
   • 1 profitable trade and 1 loosing trade.
   • Made +3R on profitable trade
   • And lost -1R on loosing trade,
   • So net 2R positive.
   • Even with 1% risk management,
   • This should be 2% gain, if anyone traded this.
4. If the second trade also worked, then it would become +6R on 2 trades.
   • +3R on first trade and +3R on second trade.
   • That means 6% on 2 trades in a single day.
   • Most of the traders, will plan to make this kind of return in one month.
   • But the reality is second trade, didn’t worked out.
   • So ended with +2R profit.
5. I’m not suggesting you to take these trades, but you can follow this style. If you liked it, you can learn this style, it is not difficult. You need to be systematic and disciplined.

If you are seeing anything else other than what I’m seeing from this data, post your view below in the comments section.

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Disclaimer : I’m not a SEBI registered analyst, these are my views only.