The market found sellers early at the open near yesterday’s highs but buyers from the lower end of yesterday managed to push the Nifty to close near midpoint and vwap.
EOD data at the close today showed the market liquidating most of the long positions it had added yesterday in both NF and BNF.
Nifty Sept F
Background / Previous Auctions :
Medium Term :
We have maintained from Friday May 16th that the range of 7560- 7125 (spot prices) seen on that day forms the backdrop of the moves we may see in the Nifty for a considerable amount of time as it was a 5 sigma event.
The auction remains positive as long as we close above the highs of that day (May16) ( Friday 8th Aug – low was 7540 and close of 7568) The largest drop seen on May 16 th was 432 points and the rally from 5110 has never been penetrated by a drop of more than 430 points .
Targets for the Upmove remain 7900 spot (achieved) and 8300/ 8581 in the medium term. Support at 7500/ 7100 spot.
Our Profile studies indicate 11600 as a long term target on the Nifty in 2016-17 provided 6300 holds through 2015
Short term :
On the Monthly Time frame we see September Nifty having supports at 7835 and 7706 on spot levels and targets of 8068 spot (done) and 8300 spot.
The Market is consolidating in a broad 100 point range between 8075- 8175 and once this consolidation is over the Sept F should go to 8330 F and 8487 F during the current series. On the lower side the NF should find support at 7860- 7900 during the series on any big downturns.
On the weekly TF the Sept F has support for the coming week at 8071 and 8041 and resistance at 8228/ 8280 and 8338 in that order.
Observations in Today’s session :
1) OrderFlow shows sellers above 8190 but buyers at 8165 and below
2) vwap of the day was at 8174 almost same as the 8167 of yesterday
3) Day type was a normal day with close at day center and vwap and the market auctioned mostly in the IB.
3a) Day was also mostly inside of yesterday’s range setting up the possibility of a range expansion tomorrow
4) Failed auction noted at 7955 on 27/08 is on day T+7 now. Since it was not visited we now have confirmation that the move off 7955 is a stronger IPM than originally thought and the market makes 7955 a bigger support.
5) Single prints noted at 8016 on 01/09 would indicate a new support base near 8016.
Hypo1 ) The excess seen near 8194 today would tell us that the market wants to drop lower to gain new buyers. Accordingly we look to short below 8162 tomorrow for the same 8140 and 8110 discussed yesterday.
Hypo2 ) Above 8197 the NF will see a rise to 8228 and 8256.
BankNifty Sept F :
Background/ Previous Auctions :
Friday May16th range of 15730- 14430 in spot provides a backdrop to the moves we may see in the BN for some time. There is a 1000 point move in BN when it trades above 15800 spot
Our bias is positive above 15100 spot, and as long as the BN stays above 15100 we will trade towards 17680 .
Short Term :
On the Monthly time frame, support for Sept BankNifty is at 15875 spot followed by 15580. First target would be 16335 spot followed by 16605 spot
On the weekly TF the BNF has support at 15960 and 15801 during the week. Resistances would be at 16409 and 16561 during the coming week
Observations in Today’s session :
1) The BNF played out inside yesterday’s range
2) vwap of the day placed at 16205 up from the 16180 of yesterday
3) Profile was a 3-1-3 distribution and means that the BNF has to break away from the 16135- 16279 range for development
Hypo1) We are back in the range 16290- 16110 but evidence suggests supply at 16270+ slightly stronger than the demand at 16110+. We would buy near 16140 with stops below 16100 and sell near 16250 with stops above 16290 to play the range
Hypo2 ) The BNF will be weak below 16110 again and look to move towards 15990 and 15953 again. Below 15953 there will be a bigger and faster fall to 15850/ 15801.