Here are profile charts of the Nifty and the Bank Nifty October Futures
First the Nifty :
Friday's move up in the Nifty was on negative delta and was promptly reversed by a spike into the close.
The Profile chart above shows the chart of Friday on the extreme right and to the left of it are two distributions made from the Friday prior i.e. 21st Sept from 11.45 am.
We have bracketed that move from 11.45 on the 21st as one auction up until the 25th of Sept. The move lower on the 26th and the 27th is shown as a separate auction,
Friday's move came from the POC of the first composite and promised bigger things , but what was missing was the Delta.
We track delta live in the trading room and is the net difference between volume traded at the ask and bid prices. Thus a negative delta would imply selling into the move up.
Have a look at the chart below :
The tick chart of the Nifty future above has the October future in the top pane and delta in the pane below.
As can be seen delta is making Lower Highs ( LH) and Lower Lows ( LL) through out the day.
Back to the first chart and 5754 is the clear ref lines for longs on Monday and the rest of the week.
First level of support is at 5716 followed by 5684. The single prints at 5660 would play the most important role for the rest of the series should the market find it self there.
Bank Nifty :
The Bank Nifty chart above is showing consolidation after a big run up in the last series.
The Bracket range is defined between 11600 and 11350.
The three POC's near 11478 are the first level of support and even supported the market on Friday. It may function as the Pivot for the range in the bracket .
Below bracket lows of 11365 , the single print at 11244 is an easy target. Above 11600 short covering will bring 12000.
And finally a look at a chart which explains the recent rally as also the fact that we will not be accelerating anytime soon.
This is a chart of the Bank Nifty Nifty spread .
The chart shows the spread reaching two year highs which has always pushed the market down from the highs.
With No other sector being strong enough to replace the banknifty, it seems the index would find it tough to sustain these high levels.
Further more, the recent reductions in the Nifty constituents by adding defensive names to the index and reducing the high beta metal space would mean that the index may be slightly off even if there is a liquidity driven high beta QE3 rally.
That's another topic and we will take it up another day.