Technical Analysis

Nifty 50 April Futures (9,040)

Akhil Nallamuthu, BL Research Bureau | Updated on April 13, 2020

The Indian benchmarks, after a flattish beginning, is now trading lower by about one per cent. This is following mixed cues from the Asian markets. Among the major indices in Asia, the Nikkei ended today’s session posting a loss of 2.3 per cent; the Shanghai composite is down by 0.6 per cent while the Hang Seng has gained 1.4 per cent.

The advance-decline ratio of the Nifty 50 index is at 21-29, meaning the number of stocks that have lost are higher than the number of stocks that have gained. Among the sectoral indices, the Nifty pharma index is the top gainer, up by 4 per cent whereas the Nifty realty index is the worst performer, down by 4.7 per cent. Notably, the volatility has gone up today as indicated by the volatility index – India VIX. It has shot up by 3.6 per cent to 51.5 levels.

The April futures contract began today’s session on a back foot by opening at 9,010 compared to its previous close of 9,086. The contract then slipped below the important level of 9,000 and marked an intraday low of 8,903. But it has rebounded from that level and the contract has now reclaimed 9,000 levels, indicating that there is buying interest as the contract softens. As long as it remains above 9,000 the likelihood of further gain is more. On the other hand, the contract has a significant resistance at 9,100 which has been capping the gains for the last three trading sessions. So, the contract should either breach 8,900 or 9,100 to establish the next leg of trend. Until then traders can hold themselves back from initiating fresh positions.

On the back of the recent bull trend, if the futures break out of 9,100, one can then initiate fresh long positions with stop-loss at 9,000.

Strategy: Buy the contract if it breaks out of 9,100

Supports: 9,000 and 8,900

Resistances: 9,100 and 9,200

Published on April 13, 2020

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