Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

Top-Down Analysis – Nifty Futures Trade Preparation for Mid October 2019

1 min read

Last two weeks the major theme in the markets is Crazy volatile swings. Crazy intraday swings in the market would make trading complex for most of the traders during those days.

The average swing in Nifty is about 180-200 pts and in Bank Nifty the average intraday swing ranges between 750-1000 pts. 10-day ATR for Nifty and Bank Nifty respectively at 188 and 905.

Post the corporate tax cut announcements not much of major news based or even based impact. when comes to nifty futures, it is more volatile driven in a non-news based / stock driven environment.

Major News and Events Vs Nifty Futures

Nifty on the monthly timeframe maintains the 2000 point consolidation (balancing) range for the past 23 months. From the investor’s perspective, it is a tight range bound activity. Though overall smallcaps and midcaps dropped in this phase it is very interesting that Nifty Futures is holding up without losing much with a consolidation phase.

Nifty Monthly – consolidation phase for the last 23 months.

The key interesting fact is that FII’s are still net buyers for the year 2019 to a tune of Rs14,380 crores (provisional figures). However, looking from the medium-term perspective they have been net sellers in the equity market since May 2019.

FII Data – Equity Monthly stats

MonthNet Buying/Selling (Crores)
Dec 2019-Nil-
Nov 2019-Nil-
Oct 2019-3,285.03
Sep 2019-6,624,05
Aug 2019-14,828.76
Jul 2019-16,870.13
Jun 2019-688.50
May 2019-2,136.28
Apr 2019+12,749.55
Mar 2019+32,371.43
Feb 2019+13,564.57
Jan 2019+127.67

Nifty Weekly

Nifty on the weekly timeframe is trending down for the last two weeks despite the underlying sentiment is bullish from the investing community.

Last week high – 11385 serves as key resistance zone for the upcoming week. Price needs to break above those levels for higher levels targets towards 11600+. Failure to break above those levels is a sign of significant weakness.

Nifty Daily timeframe

Nifty on a daily scale is moving down with two consolidated rotations for the last three weeks. Interestingly, 11190 is serving as a key major support post corporate tax cut announcement. Failure to hold this level brings a possible test towards 10720 levels on the downside.

Nifty Daily – Consolidation phase

At this point thrice the 11190 is tested in the last week followed by failure to follow through. A follow thro below 11190 brings deeper damage in the current underlying trend with deeper downward bias.

on the other side in Nifty Spot – Investor major reference level 200 day moving average is continually getting whipsawed. Current 200 day MA in spot comes around 11270 levels.

Nifty 200 day moving average – Daily chart

Overall, the medium-term trend is down and immediate short term trend is consolidating. The market could take a bullish approach if the price is able to break and hold above 11380 levels and possible deeper bearish scenario if in case the daily supports at 11190 are likely to break on the downside towards 10700 levels.

Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

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