Technical Analysis

Nifty 50 January Futures (14,470)

Akhil Nallamuthu BL Research Bureau | Updated on January 19, 2021

Nifty 50 and the Sensex have gained about 1.3 per cent each on Tuesday

Following positive cues from the Asian market, the Indian benchmark indices opened with a significant gap-up and has been steadily rallying since morning. So far, the Nifty 50 and the Sensex have gained about 1.3 per cent each today. In Asia, the Nikkei 225 and ASX 200 has posted a gain of 1.4 per cent and 1.2 per cent, respectively and the Hang Seng is up by 1.8 per cent.

The positive bias is affirmed by the market breadth of the Nifty 50 index as the advance-decline ratio stands at 45-5 and the volatility has dropped considerably. That is, India VIX — the volatility index — has dropped by over 5 per cent to 23.15.

Like the benchmark indices, the mid- and small-cap indices have gained between 1.6 and 2.3 per cent. Moreover, all the sectoral indices have gained on Tuesday. This is led by the Nifty realty index, up by 4.3 per cent followed by the Nifty PSU bank index, up by 2.9 per cent.

The futures contract (January expiry) of the Nifty 50 index opened with nearly 100-point gap-up as it began the session at 14,380 vs yesterday’s close of 14,287. It then rallied to mark an intraday high of 14,509 before moderating to the current level of 14,470. Thus, the contract has recouped the loss that it witnessed on Monday.

The price action looks bullish and the contract is likely to advance from the current level of 14,470. Hence, one can initiate fresh long position on declines with a stop-loss at 14,400. On the upside, the contract will most likely cross over 14,500 again and move towards 14,540. Resistance above this level can be spotted at 14,560 and 14,600. Notable supports are at 14,450 and 14,400.

Strategy: Go long on dips with a stop-loss at 14,400

Supports: 14,450 and 14,400

Resistances: 14,540 and 14,560

Published on January 19, 2021

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