Bank Nifty Trade for Outcome of UP Election Exit Polls

Bank Nifty is trading in a range for last 3 weeks awaiting outcome of Elections across various states and especially UP. Tomorrow after 5.30 pm Exit polls will give some picture about outcome of these elections. Market will react to these Exit polls on Friday!

Strategy for this scenario can be as follows for option trading by buying options:

Buy Put and Call weekly options expiring Mar 16 in equal lot of strike price almost 400-500 points away from spot price of Bank Nifty at around 3-3.15 pm tomorrow. The premiums will be on higher side due to increase in volatility(that's not favorable to buyer of options).

On Friday Bank Nifty likely to open 300 points Gap Up/Down. In that case The option where Index move is favorable may become 2.5-3 times of purchase price while other side option may fall to 0.5-0.25 times of purchase value that should be exited as soon as market opens for trade. But one will get Net profit of 50-100% of capital invested. The option premiums will drop due to drop in volatility but sharp price movement on one side will help to achieve profit.

In case there is no major Gap Up/Down (very Low probability, but can't ruled out), losses would be higher due to reduction in premiums due to drop of volatility and one will have to immediately exit all position at the opening of market.

Comments

Bank Nifty for Week Starting Jan 16, 2017

Last week Bank Nifty made big up move of 650 points. High made is 18966. It looks like it is ready for further up move. On hourly chart Middle BB line(RED color) is providing support and Index may again move up towards upper line of Blue Channel. The Best trading strategy is now to go Long when Index is bouncing from Middle BB line and Exit when it is near upper line of Blue Channel. Hourly RSI shows Resistance at 85 level and Support at 59 level. So Blue channel along with RSI levels are good indicators for trade. It is not good idea to go short as Up Momentum is strong. If Index breaks Middle BB line then only short positions should be taken. If Bank Nifty breaks 18850/18800 then we may see it reach quickly to 18650/18600. Also it may break RSI support level of 59 for major correction. We may see Index moving along Upper BB line (Blue color) on Daily chart. Index may face resistance at 19150/19200 level. If it crosses 19200 it can reach to 19500/197000. Daily RSI is

Bank Nifty EOD Feb 7 Update!

Bank Nifty is in consolidation/correction mode. Today it moved in a very narrow range and it seems that it is under time correction before a BIG move. It is awaiting RBI monetary policy decision due on Feb 8 and bank Nifty may make Big move on Feb 9 in either direction depending on market's reaction to RBI decision. Bank Nifty 15 min chart shows wave a and wave b completed and wave c is in progress. It may take triangle pattern of correction as uncertainty of event outcome is playing out. It may correct to 20250/20030 levels.

Hindalco - On the Verge of Break-Down?

Hindalco Daily chart is posted below: Daily chart shows prices are facing resistance at Gann level 183 and now prices are near lower band of Bollinger Bands(BB) that are expanding. Hence, a big fall is expected in next 2-3 trading sessions with target of next Gann level 157. Daily RSI is also broke 50 level coming from upside overbought 70 level that signals further fall in coming days.

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