From the election year of 1998 the swing in the Nifty between the Highs and the Lows has been from 11% to 42%.
The Last elections of 2009 produced a swing of 30% between the highs and the lows.
Needless to say that the election results differ from the average 4-6 % monthly move by a huge margin and can be a source of anxiety or opportunity depending on the way you look at them.
With 4 full sessions left to go before D day on the 16th I wanted to track the current movement of the Index from the point of view of the long term trend and the current open positions of Players.
When Liquidity starts surging in or out of an Index then no lines on the chart will hold their moves or even good technical analysis , but if you look at price action we can still get a context .
Longer Term Daily Nifty Spot :
We have tracked this chart before in this section.
It’s a simple vwap chart of the Nifty with a price channel added.
Basic theory behind vwap is price and volume show up all that can happen in an instrument and when you see vwap in terms of the displacement which can happen from the Mean on current volumes it can show you what is the maximum price that can be achieved on current volumes.
In the Nifty that upside is at 7500 beyond which the probability of an upper move comes down to 1%.
The green channel from 2009 is at 6800 currently and would rate a higher move from here to 7500 as 6%.
Prices can step outside these bands on the minute scale but the probability of them closing beyond on the daily for a few consecutive sessions is shown above .
The vwap of the rise from 51xx last year is now at 6170 and is also the lower end of the price channel.
If there is big profit booking then watch this level for signs of the Buyers coming back to Buy the Dips
Longer Term BankNifty Daily :
I do remember mentioning levels of 13750 when we last tracked this chart when the BN was at 12200.
It’s been a good move to the upper end of the vwap channel with maybe some more upside left to 14100- 14300.
Again the Higher projection on this chart is 15637 on current volumes with the previous tops at 13300 as new support.
As in the Nifty chart above the BN is also at the upper end of the 2SD line and the relative outperformance of the BN w.r.t the Nifty may be over.
That’s an important point to note as we have seen recent buildup on long momentum in the BN derivatives space and gives us big cues to watch out for in the coming sessions as Big Money positions for the event.
Nifty 60 Minute chart :
I don’t like to complete a daily analysis without looking at how the shorter time frame is placed as we track them live in the Trading Room.
This vwap chart tracks the Hot Money from Feb where we had the Big drive Up and is currently projecting the move to extend to 7037- 7100 beyond the 6800 level.
Support has built up now near 6750 and 6585/6500 spot would provide a cushion if there is profit booking.
A further sell off from 6500 can bring 6300 quickly below which it is a free fall to 5950.
Upsides per this hourly chart are at 7300
BankNifty 60 Min chart :
The BN chart from the FEB move projects a 2sd band at 13900 currently and the upper displcemnt above that number is 14740 now.
Immediate support at 13400 followed by 12630 if there is extended profit booking
12222 would be the final stop for all long positions from FEB and below that we are looking at a drop to 11508 and then 10545 .
The levels above are all general guidelines which the market would be watching for existing positions or additions of new positions.
Finally the liquidity move is based on where the market is holding the positions currently and their reactions to the move from the event.
Needless to say the market is long into the event as any data point will show you.
The profile chart below shows that the market is actually 2 time frame ( maybe cos of extensive hedging in the derivatives space) and gives us a clearer idea of how this money will behave into the event.
Nifty Profile chart :
The profile on the extreme right is the Big Trend Day of friday.
From 10th April I have marked the 2 time frame activity in a bell shaped profile which as you can see is nearing completion.
This is roughly 6656 – 6872 give or take 20/30 points either side. This is about 216 points.
If you recollect we had tracked a similar bell on the bigger time frame ( in previous posts in this space) from 5980-6320. Using the principles of balance that bell had projected to us targets of 6700 and 7100 then being 2x and 3x of the height of the balance.
This balance created from April if taken out on Monday also projects 6872+ 216= 7100 for this move.
Hence we can look to add up the longs as long as price sustains above friday highs but not if it stays below.
The Trend day would also tell us that new longs after a trend day have to come only above that day high.
Look for the imbalance to continue if we cross that balance high or else we stay in the April balance.
BankNifty Profile :
The bankNifty profile and the break from balance is shown in the above chart.
We can see that BNF broke out of the April balance and even made it to 2IB or 13790.
3IB is at 14320 or the top of the trend line in that daily chart we have seen above.
Since this has been the leader of this part of the Bull Run and is still leading we will watch for signs of continuity to 3IB in this space.
Finally in closing a look at the Open Interest which is where the money is currently :
BNF OI for May series :
Clearly there is long buildup in the BNF space and even Friday a lot of longs were taken and carried.
As mentioned before we will track this closely over the next 4 sessions to see if this money is staying or liquidating
Nifty May Series OI :
The Nifty Open Interest bars by comparison are not much and as mentioned it will be the BNF which should give more cues to how the longs control the market from here.