The market tested supply at 8173 F today and managed to break above it after finding sellers not being aggressive at that price point for over an hour.Even the BNF closed at month highs
EOD data at the close today showed that the market added an almost equal number of longs in Nifty which were closed on friday and the Banknifty had won back all the Open Interest it had lost in the 3 days of decline.
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 7500/ 7100 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 is consolidating in a broad 100 point range between 8075- 8175 and once this consolidation is over the Sept F should go to 8330 F and 8487 F during the current series. On the lower side the NF should find support at 7860- 7900 during the series on any big downturns.
On the weekly TF the Sept F has support for the coming week at 8071 and 8041 and resistance at 8228/ 8280 and 8338 in that order.
Observations in Today’s session :
1) OrderFlow shows buyers absorbing the selling at 8173
2) vwap of the day was at 8167 up from 8114 yesterday.
3) Day type was a normal variation day with close at the upper extreme
3a) Small excess noted at 8138 today indicating the market’s unacceptance of the price probe below 8150
4) Failed auction noted at 7955 on 27/08 is on day T+7 now. Since it was not visited we now have confirmation that the move off 7955 is a stronger IPM than originally thought and the market makes 7955 a bigger support.
5) Single prints noted at 8016 on 01/09 would indicate a new support base near 8016.
Hypo1 ) The Nifty shows imbalance off 8174 again and should target 8228/ 8235. All dips to 8175 will be buys with stops below 8155 for the above mentioned auction to work fully.
Hypo2 ) Below 8154 the NF will weaken and go to 8140 and 8120.
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 followed by 16605 spot
On the weekly TF the BNF has support at 15960 and 15801 during the week. Resistances would be at 16409 and 16561 during the coming week
Observations in Today’s session :
1) The BNF played out to hypo1 mentioned yesterday
2) vwap of the day placed at 16180 up from the 16074 of yesterday
3) 16180 shows algo activity and a player(s) trying to defend the 16180 level.
4) Day type was a normal variation with a successful range extension.
Hypo1) The imbalance target of today is 16410 and as long as 16225 holds now the path the auction takes should be to 16410.
Hypo2 ) The BNF will be weak below 16170 again and look to move towards 16108 and 15953 again. Below 15953 there will be a bigger and faster fall to 15801.