Levels and Plan for 28th Oct

The first day of the week saw a rise in IV’s across the board as traders prepared for the outcome of the FED meet later this week and the October settlement. It’s all about managing the inventory and risk as traders looked like they are pruning long positions today

 Nifty OCT  F

 

Nf_Compo1

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 : 

The marked finished a  full session above the longer time frame supply at 7920- 7940 spot last wed. Support now placed at 7920 spot this week.Below 7920 the market can once again drop a 100 points to 7827 quickly. 8060 spot is now short term resistance.

Observations in Today’s session :

(based on Fut prices)

https://www.dropbox.com/s/4g5gs9rqde49cv9/Oct_NF.png?dl=0

#) A market wth a prominent POC at 8028 yet an open and close at opposite ends

#) The market did not find new buying above last wednesday’s highs of 8022

#) Sellers seem to have taken up positions at 8030- 8035.

#) vwap placed at 8025

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

#) Day type was a normal variation type with a close at the lows.

#) The normal day seen on wed last gapped higher but there was no visible follow through buying

Hypothesis  : ( Based on Futures) 

Hypo 1 ) Sellers seemed to be holding the upper hand today. The idea would be to short a rise near 8011 F or even near 8030F with a stop at 8043 for a target of 7992 and 7934 F.

Hypo2 ) If NF auctions above 8053 then longs can be initiated with stops below 8020 for 8082 and 8111.

BankNifty Oct F :

 Bnf_Compo
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 : .

Support for the BN spot is now at 16300 spot this week followed by 16128. Resistance to the upside would be 16560 and 16720 this week.

 

Observations in Today’s session :

(based on Fut prices)

 

https://www.dropbox.com/s/r4rbs7x5ci8huw0/Oct_BNF.png?dl=0

#) The  responsive buyers seen at 16400 F on wed overcame the seller at 16550 today creating the move to 16700 which played out to the hypo1 estimate.

#) Today’s Profile shows sellers at 16670 .

#) vwap of the day was at 16608

3) The previous resistance at 16550 turned into a minor support on the intra day dip today

Hypothesis  : ( Based on Futures) 

Hypo1) If the auction stays below 16550 tomorrow then BNF will go towards 16488- 16456 again. Below 16456 the BNF can drop to 16344.

Hypo2 ) Above 16630 the BNF goes back to 16700 again and a cross of 16700 can bring 16900 F