Month: November 2012

The last 2 sessions in the Nifty and the BankNifty saw FII's make purchases of 2650 CR in the cash segment and 3700 CR in the Index futures.

Do you want to know where this buying happened?

Have a look at this chart :

In market profile the most common way to look for longer time frame activity is to check for single prints.

Single prints are areas of institutional activity where we see a quick rejection in the form of a strong movement away in a short period of time.

Here are two volume profile charts of the Nifty and the BankNifty futures showing the distribution of volumes over prices through the November series with 1 day left for expiry.

Nifty :

Last month most of the rollovers took place in a narrow range between 5728 and 5756, so it was expected that this series may have some volatility.

In fact the profile picture above shows the market's liking to 2 distinct zones , one at 5740 and the other at 5640.These can be seen from the black graph across the chart.

The shape is that of a DD with the Nifty resting at the upper volume level of 5740 currently. The extent of the move in the past session and the fact that we hit the volume pocket shows that we may not move much ahead above this point for expiry.

The series volume weighted average is at 5680 and price staying above this will definitely give a positive bias to the next series.

As we know from market profile, buyers are in control above VWAP. Also value high at 5730 near the POC will give a positive spin to the index above this value line for december.

BankNifty :

Unlike the Nifty chart above which is a DD for the series the BankNifty profile looks more balances with a single distribution centering at 11512 in the futures.

The value area developing is almost the same as the OCT value area indicating acceptance of these prices after the big move from 10000 from 2 series earlier.

The 11500 zone will continue to be a pivot around where the next large moves in the bankNifty should emanate from,

11500 is also the series vwap and gives the bias to the buyers again for the banknifty.

Developing value high is again places near 11700 like the October series and will be an important level for further upsides in the bankNifty.

The Prime levels are updated in a sheet periodically by us .

Here is the Updated Nifty profile as of the close yesterday.

The chart shows the DD being complete yesterday and the market trying to make a move .

In such cases the market tries to stay in the centre of the two distributions as it probes buyer/ seller strengths.

Once the market has spent time it can quicky move through either of the 2 distributions, which will be swift moves in thios case a 20- 30 pointer.

Here's a look at the composite profiles on NF and BN.

On Friday as we spiked lower at the close, the auction did not complete.

Today's move ( 2 hours of trade in the morning)  is to balance the big move down from Friday and the profile on the extreme right shows the volume building as price gets accepted at these lower levels.

The chart above is a composite profile chart of the different auctions and we can see the last attempt at value was at 5548 NF. This will be the minimum accepted level on a closing basis for the bulls to seize momentum again. Please note that it is considered "minimum" of the requirements.

After the balance or the normal distribution of the 8th of November we can  see value going lower .This drift of value lower on the daily shows the sellers in control.

We also monitor "Delta" in the trading room live which is the net difference in the buying and selling volumes. This delta figure is not yet green in the first two hours of the day which to us indicates the absence of big buying at these levels. We still have a few more hours in the day and that can still change.

Overall the profile is trying to balance here and we should get a sideways move developing here for this session and a move possibly tomorrow out of here, which should complete a double distribution from Friday.

Here is an updated multi week composite on the Nifty spot.

We are back in the big balance area of last week.

The break from the balance area on the 30th was met with a b shaped profile which indicated short covering.

The profile yesterday closed out all the single prints and was at the boundary of the previous distribution.

Today the market has gapped up and is back in the previous balance zone in an open which was OAOR with potential to move either side.

From a swing term basis the market now needs to look above the big balance zone and search for buyers.

5703 on the spot ( as outlined) will be our reference level for upsides.