Yesterday’s long liquidation resulted in a trend lower today as the marked dived all day but orderflow showed that it was an over-reaction. We will know for sure tomorrow .
EOD data at the close today showed NF reducing 10580 contracts and BNF reducing 2201 contracts. However the exchange between players points to an UP day tomorrow ( Close > prev close)
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 7900/ 7500 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 was consolidating in a broad 100 point range between 8075- 8175 F. This Monday it broke that low and headed down the path of least resistance pointed earlier towards destination trade of 8020 F (achieved) and 7970 F (achieved) Likely to bounce back up from around here. ( refer points 5 & 6 below in Obs)
On the weekly TF the Sept support for this week at 8071 stands broken and will turn into resistance .The second resistance is at 8148.
Observations in Today’s session :
1) Trend day lower with open and close at extreme ends.
2) vwap of the day was at 8014 down from the 8067 of yesterday
3) Pull back high was at 7995 and may turn into mild intra resistance .
4) Auction shows excess at 8100 in the form of the gap indicating short term resistances building
5) Failed auction noted at 7955 on 27/08 . Since it was not visited we now have confirmation that the move off 7955 makes that level a support for the near term
Hypo1 ) An open above 7952 will get support from the late buyers around 7984 and likely to move to 8015 where the seller may try to assert himself again. We watch OrderFlow at 8015- 8020 to see signs of selling or covering. Above 8020 the market has a free run of 30 points to 8048/ 8050. Below 8015 can drop to 7985 again.
Hypo2 ) An open which breaks 7943 F will force the market to drop to 7892 F.
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 ( the BN did 16309 today- 11th sept) followed by 16605 spot
On the weekly TF the 1st line of support in BNF will be at 16200 and then at 16030 during the week. Resistances would be at 16409 and 16561 during the coming week
Observations in Today’s session :
1) The BNF trended lower all day and closed at the other extreme.
2) vwap of the day placed at 16042 down from the 16257 of yesterday
3) Buyers failed at 16130- 16170 today creating a sharp move lower
4) Pull back high was at 15981 and would be first line of resistance tomorrow.
3) Profile closed below the 3-1-3 distribution of 16105- 16279 range .
Hypo1) An open above 15880 would mean the BNF goes towards 15981-16007 where orderflow should be watched for signs of selling or covering. If it crosses 16007 then BNF can rise further to 16093 again.
Hypo2 ) The BNF fall below 15835 will be severe and alter the recent upmove. Immediate target below 15835 is 15677.