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Will The Selling Continue?

Today we felt what Micheal burry must've felt during 2008 crash. He anticipated and calculated everything way in advance. (Although it wasn't a black swan event but feeling remains the same).

India’s most volatile Bank Nifty Futures has corrected 1319 in last four trading session as institutional sellers were present in last one week. During the 2nd half, the index witnessed further selling by the institutional sellers. The big question is, will be selling continue?

Today, you must’ve seen back to back bad news were coming like

·         US India Inflation Data

·         Russia threatening a war

·         SEBI small cap issues

·         Indian China Border issues


The point here is, smart money already knew this and they started building position accordingly from 2nd March 2024 itself, and how do I ratify this? Just visit my LinkedIn page and go through our newsletter. Premiums said everything.

Will Selling Continue?

In Today’s session, Bank Nifty has fell 487 points and closed at 46,981. Today’s fall was triggered by call selling in intraday short positions by today’s institutional sellers. Traders must keep in mind that today’s fall was an isolated move and has no connection to the selling that happened on Monday (11th March 2024). The 3D Delta System is indicating, tomorrow’s range high will be the critical pivot point where fresh selling might be initiated again. However, if Nifty trades above tomorrow’s range high, it will trigger short-covering moves even if the institutional buyers are not present in the market. Interestingly, even if Bank Nifty slips below today’s range low, it will need the participation of new institutional sellers for fresh selling to be triggered. If new institutional sellers do not participate at the range low, the index will witness a sharp bounce back.

What Are The Odds Of A Trend Reversal

Although the odds of a trend reversal are very slim, traders need to keep in mind that Bank Nifty has already fallen 1319 points in the March 2024 contract. Thus there is a strong possibility of short covering if the index trades above tomorrows range high.

(Observation – Institutional sellers who create trend are not present yet. What that means is, bounce can be sharp in absence of serious sellers.)


Trade Execution

Seven trades were initiated. Most of them call selling spreads and few put debit spreads. Few trades are:-

Trade 1:  47,100 CE sold at INR 215 and covered at INR 7

Trade 2:  47,100 PE was bought and 46,900 PE was sold creating 1:1 debit spread. This spread was initiated at 57 and covered at 131.

Both were weekly spreads (13th March 2024 contract).

Few Nifty trades were also initiated like we have sold 22,400 CE of 28th March 2024 contract at INR 389 with hedges. The same call closed at INR 110. This trade was initiated on 6th March 2024.

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