From Gap-Up to Sharp Reversal: Missed Opportunities in Banknifty and Nifty

Market openings can be full of promise—or deception.

Nifty

Nifty followed suit with a +76.90 points gap-up at 23,421.65.

At first glance, this suggested a bullish tone for the day. However, the market had other plans: while Banknifty quickly filled its opening gap in the first 5-minute candle, Nifty initially held on to its gap-up levels. Below is a breakdown of how the session played out, from early trades in Kotak Mahindra Bank and WIPRO futures to the sudden reversals in the indices—and the final close that left many questions for tomorrow.

The session kicked off with both indices opening higher than the previous day’s close. Banknifty, however, wasted no time; it filled its opening gap almost immediately, indicating a potential shift in sentiment. Nifty, on the other hand, retained some of its gap gains for a while, suggesting that the broader market might still be leaning bullish—at least for the moment.

Even though I was open to a bullish trade if a convincing setup emerged, I specifically kept an eye on Kotak Mahindra Bank and WIPRO for potential short-sell (futures) trades. Both stocks had shown strong gap-up moves recently, making them candidates for a short-lived pullback:

Kotak Bank (Jan 25 Futures)

• • Entry: ₹1,914.10
  • Exit: ₹1,905.25
  • The trade yielded roughly a 1:2 risk-to-reward ratio.

WIPRO (Jan 25 Futures)

• • Entry: ₹303.95
  • Exit: ₹301.95 (3,000 quantity)
  • I exited earlier than planned because the stock was nearing its day low. My logic was that the day low could act as support, and I didn’t want to risk a reversal for the sake of a few extra rupees.

Both trades in Kotak Bank and WIPRO panned out well, but I noticed I was missing potential index trades while focusing on these individual stocks.

While Banknifty quickly filled its gap and started showing consecutive red candles on the 15-minute chart, Nifty was slow to follow. Yesterday, I had mentioned that the breakout in Nifty didn’t look entirely convincing because the consecutive green candles came with long wicks, often a sign of weak bullish momentum.

Today played out similarly, but in reverse—Nifty drifted downward after the gap-up, eventually reaching yesterday’s low. Banknifty, which had shown strength the previous day, also turned south. A potential short trade in both indices was there for the taking, especially after the gap fill, but I didn’t jump in.

“You can’t capture all the trades you see on the charts,” I reminded myself. And since I was managing my stock futures trades, I couldn’t fully capitalize on the index moves.

I briefly attempted a 49,500 CE Sell at ₹394, anticipating further downside toward a gap left from the prior session. However, I exited at ₹398.45—a small loss—because I felt uncertain about the spot’s support zones. I’ve been trading conservatively ever since recovering from last week’s losses, preferring to lock in small gains or exit trades that lack strong conviction.

Around mid-morning, Nifty found support near its previous day’s low—in fact, near the low from January 17th—forming a double bottom or “W pattern”. In just two 15-minute candles, it surged toward the day’s high.

Banknifty also bounced from yesterday’s low, although it didn’t make it back to its own day high. The turnaround showcased how volatile the market can be—what seemed like a guaranteed downtrend suddenly flipped into a swift upside move, then reversed again.

ICICI Bank contributed significantly to today’s price swings in both indices, adding to the choppiness. One moment, the market soared; the next, it gave back much of those gains. Such rapid changes can be disorienting, reinforcing the need for a clear plan—especially if you’re trading around critical support/resistance levels or bridging between spot and futures positions.

1. Gap-Ups Can Deceive
   A bullish open doesn’t guarantee a bullish day. Both indices showed early upward momentum but soon switched gears, emphasizing the importance of confirmation before committing to trades.
2. Balancing Stock Trades vs. Index Trades
   Managing positions in individual futures (like Kotak Bank and WIPRO) can cause you to miss index moves—especially if the market offers high-volatility opportunities in Banknifty or Nifty.
3. Support and Resistance Matter
   Nifty’s bounce near the previous day’s low highlights how quickly sentiment can shift around key price levels. Recognizing these zones can offer high-reward, low-risk entries.
4. Consecutive Candles Reveal Momentum
   Long wicks or repeated red candles in a short timeframe often hint at fading momentum or accelerating selling pressure, respectively.
5. Volatility Demands a Clear Plan
   Intraday whipsaws stress-test your discipline. If you’re scalping, stick to tight Stop Losses; if you’re holding for bigger moves, ensure you have a solid rationale.
6. Missed Trades Are Part of the Process
   Not capturing every move is normal. Overtrading to chase every opportunity is a fast track to emotional and financial stress.

• Nifty closed near 23,000, creating a large bearish candle that engulfed the past six days’ range. If we see a flat or gap-down open, it could lead to more selling.
• Banknifty invalidated yesterday’s “W pattern” hope, ending near 48,571. Its next support might be near

In hindsight, the day offered multiple shorting opportunities in both indices, but I focused on stock futures trades instead. While I regret not capturing the index falls, I’m reminded that the market will always present more chances. The ultimate goal is steady growth, not chasing every swing. After all, there’s always another trading day, and the market is here to stay.