Nifty Call: Tread with caution as long as contract trades below 11,000 levels

Yoganand D | Updated on August 02, 2019 Published on August 02, 2019

Nifty 50 August Futures (10,953)

Taking bearish cues from the weak Asian markets, the Sensex and the Nifty started the session with a gap-down open. The Nikkei 225 has tumbled 2 per cent to 21,087 and Hang Seng Index has declined 2.2 per cent to 26,937 levels.

The key indices took support from the intra-day low and began to recover; both the Sensex and the Nifty have trimmed their initial loss. The market breadth of the Nifty index is biased towards declines.

The India VIX has gained almost 4 per cent to 15.13 levels. The Nifty Mid and Small-cap indices have fallen 0.5 per cent and 0.7 per cent in today's session. Buying interest is seen in Nifty Auto index which has gained 1 per cent while other sectoral indices are trading in negative territory.

After a gap-down open at 11,940 the Nifty August month contract extended the down-move and recorded an intra-day low at 11,886. But the contract recovered from this low on the back of short-covering and marked an intra-day high at 11,994. The contract continues to remain volatile amid recovery. Hence, traders should tread with caution and consider initiating fresh long positions on a strong rally above 11,000 levels with a fixed stop-loss. Next key resistances are at 11,025 and 11,050. A strong decline below 10,920 can drag the contract down to 10,900 and 10,880 levels.

Strategy: Tread with caution as long as the contract trades below 11,000 levels

Supports: 10,920 and 10,900

Resistances: 11,000 and 11,025

Published on August 02, 2019
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