Levels and Plan for 22/10/14

Finally shorts relented today in the Nifty F, some of them booked and the index closed above 7920 . For the second straight day the dip was aggressively bought as sellers got pushed into a corner. 

 Nifty OCT  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 450 points .

In the current context the drop from the Nifty spot high of 8180 to the recent low of 7723 made on 17/10 equals 457 points. There was a failed auction noted at the lows on 17/10 which is a reference point and a market which tells us that it does not have new sellers.

Short Term : 

Longer time frame supply rests at 7920- 7940 spot. Above these levels a fierce short covering move can come to 7995/ 8040/ 8082. Support placed at 7841 spot now.

Observations in Today’s session :


1) A two time frame auction which showed buyers aggressively defending the lows

2) Today’s chart shows strong buyers at 7918 F

3) Profile formed a curve which looked incomplete to the upside and sould have moved to the hypo1 estimate given

4) Failed auction seen at 7752 F  on 18/10 and is on day T+2

4) Day type was a normal variation with a vwap placed at 7931 but showed an inability on the path of the seller to push below VAL.

5) Since the profile was similar we maintain our view on the hypos and the same levels as yesterday

Hypothesis  :

Hypo ) The NF profile is delicately placed for a short covering run if it trades above 7942 tomorrow in which case new longs can be taken with stops below 7909 for 7998/ 8056F.

Hypo2 ) If NF auctions below 7882 then it will go for gap fill at 7857 and move lower to 7824 if buyers are not seen at 7857.

BankNifty Oct F :

Background/ Previous Auctions :Medium Term- 


Friday May 16th 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 : .

BN resistance now would be at 16463 spot which is the imbalance measured target of the move away from 16000 spot. Support now for this index is again at 15800 spot as before.


Observations in Today’s session :



1) The profile in the BNF was a 2 time frame normal distribution curve wth sellers above and buyers below

2) Profile shows long liquidation coming in between 16400- 16470

3) vwap of the day was at 16408.

Hypothesis  :

Hypo1) If the auction stays above 16395 F tomorrow then BNF can rise up 16516 mentioned yesterday and 16640- 16680 beyond it. These are projected levels based on auction market theory and it would not be right to wait for the last point to book a position. Sl for the long view is 20 points below 16390

Hypo2 ) Below 16350 the index can drop to 16304 support and 16190 below it.