Monday, January 11, 2016

Capturing the carnage in Banking stocks!!

The first week of January 2016 was painful for Global Equity Markets wherein Indian Equity Markets lost almost 5% in a week. Banking stocks were the worst hit by the down move. Bank Nifty lost more than 1100 points in 6 trading sessions. We were cautious on the Indian Equities from the end of December 2015 and suggesting shorting opportunity on various stocks through “The Financial Waves Short Term Update”. We were able to capture the fall in Yes Bank and part of the same is shown below:

Yes Bank 60 mins chart: (Anticipated in the morning of 1st January 2016)

Yes Bank 60 mins chart: (Happened on 7th January 2016)
(part of research taken from “The Financial Waves Short Term Update” published on 1st January 2016)

Wave analysis:

“prices have been intact in downward moving channel. As per wave perspective, stock has been forming Complex Correction pattern and intermediate wave y of the same is ongoing. Prices have reached towards channel resistance along with 30 weeks Exponential moving average and hence price action of next few days will be crucial to observe. Stock has given close below prior bars low after 11 trading sessions which is suggesting negativity.”

As shown in 60 mins chart, prices have reversed from the channel resistance along with 61.8% retracement of the prior down move. The down move of last session has also broken upward moving channel. Now move below 710 will provide further confirmation that minor wave b of intermediate wave y completed and next leg on downside in form of minor wave c has started.

In short, Yes Bank has reversed from the crucial channel resistance. Move below 710 will take prices towards 680 level where area of minor wave a is placed.

Happened: Yes Bank moved in lines with our expectation. Post Breaking 710 level prices have made low at 675.70 level on 7th January 2015 and achieved our target. Bank Nifty is now very close to the low made of 15760 in the month September 2016.So what should be the trading strategy now for Banking stocks?

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