The nifty trended lower from the value created over the past few days in a drop of 20 points mid afternoon and proceeded to lower levels. The result put the market back in imbalance after many days.
|Nifty DEC 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) 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 to 8626 measures 903 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 the Nifty’s reaction at this price point has been that of consolidation at the highs which increases the chances of further upsides as sellers not seen capable to drive prices lower yet.
Our preferred scenario of a consolidation move for 8- 12 sessions is playing out fully and we wait for a Santa rally around Dec 18- 20 to drive the index in the next leg up.
As of the moment, upside is open till 8748- 8788 for dec above 8625 cross . Downsides for dec should be restricted to lows of 8400- 8349 spot where buyers should respond again
Observations in Today’s/ Previous sessions :
(based on Fut prices)
#) The NF broke out of a multi day balance and proceeded lower .
#) The break below previous support of 8540- 8550 was on heavy volumes and took the market to imbalance.
#) The objective of the imbalance below 8550 is towards 8448F . However if buyers do not show up at 8448 F then NF can drop to 8377F.
#) Scene of the crime point is at 8552F and will serve as resistance over the next few sessions.
#) The market was successful in auctioning below the Failed auction point of 8540 (2/12)noted earlier last week.
# Previous Bracket high of 8516-8492F tried to absorb the selling pressure but the NF closed at the low point of the day in a double distribution.
( Based on Futures)
Hypo1 ) If NF auctions below 8483 then it will move to 8448 . A further drop below 8447 can bring 8378 F during the week. Intra day sl is now at 8516 F for this move .
Hypo1 ) If the auction goes above 8516 F then NF can go upto 8547 where the seller is expected to respond again. Sl for this 30 point long is 8495.
BankNifty DEC F :
|Background/ Previous Auctions :
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. (The High made on 07/12 was at 18875 spot.) Meanwhile 17680 – 17710 is developing as a nice base and a support line for the medium term
Short term :
(based on spot prices)
For the current week the auction has support at 18618 Resistance to the upmove will be at 18934. Auction is positive above 18300 spot and should find dip buyers as long as 18300 is held.
Observations in Today’s session :
(based on Fut prices)
#) The BNF profile was a double distribution trend day which closed at the lower end.
#) vwap was placed at 18721 as the BNF auctioned below it all day
#) Auction was delicately poised at the support band of last week near 18580- 18600 F below which the BNF can auction down to the FA poiint of 18404.
#) The imbalance objective below 18580 support band is 18400 and 18328 F. Sl would be at 18720 F.
#) On 02/12 we see a failed auction at 18404 F which is a ref point for the coming sessions
#) excess seen at 18240 on 28/11
( Based on Futures)
Hypo1) If BNF auctions below 18580 then it can go to 18510 and 18400F. Sl for this view is 18690 F.
Hypo2) IF BNF auctions above 18690 F then it will rise to 18774 and 18860 F. Sl for this view is 18635.