Levels and Plan for 3rd Dec

 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) 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 last Nifty spot swing high of 8180 to the recent swing low of 7723 made on 17/10 equals 457 points. Conversely the Nifty has run up straight 2 times for 936 and 925 points . The upmove from 7723 is now 896 points.

There was a failed auction noted at the lows on 17/10 at 7723 which is a reference point for the future.

Short Term : 

(On spot prices)

The Nifty has managed to stay above the longer time frame supply at 7920- 7940 spot. This region is also now new support over the short term.  The previous swing high of 8180 spot has excess now and is also a higher support for the index.

Our yearly target of 8580 spot has been hit and we wait out the Nifty’s reaction at this price point over the next 2- 3 days. Quite likely we may see a reaction down upto 8452 or even a sideways move for 8- 12 sessions before a Santa rally around Dec 18- 20.

Observations in Today’s/ Previous  sessions :

(based on Fut prices)

#) The NF auctioned lower and below the neutral extreme point of yesterday (bearish)

#) The auction of the day was a neutral center which closed at vwap

#) The excess buying of 28/11 is now closed off and the OI shows reduction at that price point (loss of up momentum)

#) Failed auction was noted at 8540 (2/12) and will be a ref point for the coming sessions

# Bracket high of 8516-8492F should cushion any immediate downfalls.

Hypothesis  :

( Based on Futures) 

Hypo1 ) If the auction goes below 8570 in the IB then with a sl of 8599 shorts can be initiated for a move to 8540 and  8516 .A break of 8516 will take the index to 8491/ 8444.

Hypo2 ) If NF auctions above 8610 then longs come back for 8632 and 8660. Sl for this view is 8588.Above 8666 the NF can go upto 8732 F.

BankNifty DEC F :

 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.  Our 2014 target of 17680 has been met. Larger Imbalance objective above 17680 works out to 18700- 18934.

Short term :

(based on spot prices)

For the current week the auction has support at 18153 Resistance to the upmove will be at 18700.

Observations in Today’s session :

(based on Fut prices)

#) The BNF profile was a neutral extreme which closed at the upper end

#) vwap of the day was at 18585

#) Day shows a failed auction at 18404 F which is a ref point for the coming sessions

#) excess seen at 18240 on 28/11

#) overall auction still contained with the profile of 28/11.

Hypothesis  :

( Based on Futures) 

Hypo1) If BNF auctions above 18610 then it will stay in range for 18710 and 18770 . Dips to 18610 are buys with a sl of 18565.

Hypo2)  IF BNF auctions below 18560 then it will trade to 18525 and 18404 below 18525. Sl for this view is 18610.