The pause seen yesterday gave way to a big move today in both the Nifty and the BankNifty as the markets trended higher and closed higher with volumes in the Nifty Sept F of 15.91 Million.
EOD data at the close today showed NF adding back Open Interest to the tune of 19064 contracts whereas BNF shed 1547 contracts during the rise.
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) . As expected the NF bounced back . We maintain our view of expiry around 8100 levels
On the weekly TF the Sept support for the week at 8071 was reclaimed .Resistance is at 8148- 8158
Observations in Today’s session :
1) Trend day which closed near session highs.
2) vwap of the day was at 8092 .
3) Pull back low was at 8117 of trend day dt 18/09 .
Other Observations from previous profiles :
1) Auction shows excess at 8100 in the form of the gap indicating short term resistances building
2) Failed auction noted at 7955 on 27/08 . Since it was not visited in 5 days we now have confirmation that the move off 7955 makes that level a support for the near term
Hypo1 ) Tomorrow is MATD ( Morning after trend day) and moves can be 2- way in the 1st session, An open below 8144 will bring 8117 and below 8116 is likely to test 8085-8095 again. We watch orderflow on the pull back at the lows as we expect the market to close higher tomorrow either at 8140- 8154 or 8204 if that resistance is crossed.
Hypo2 ) If we break below 8085 tomorrow then we will close the day and week around 8028/ 8038.
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
Observations in Today’s session :
1) The BNF was also a trend day based on shorts covering.
2) vwap of the day placed at 16079
3) OrderFlow chart shows buyers near the open controlling the Up auction.
Hypo1) Pull backs to 16130- 16150 are buys in BNF for 16300 with a sl below 16090.
Hypo2 )If 16090 is broken then BNF will fall to 15980 again.