Technical Analysis

Nifty 50 July Futures (10,742)

Yoganand D, BL Research Bureau | Updated on July 10, 2020

The Sensex and the Nifty 50 commenced the session with a gap-down open, taking weak cues from the global markets. The US indices- Dow Jones and S&P 500 had fallen 1.4 per cent and 0.6 per cent respectively in last session. In today's session, the Asian indices, Nikkei index declined 1 per cent to 22,290 and Hang Seng index has tumbled 2.3 per cent to 25,597 levels. Following an initial recovery, the Sensex and the Nifty 50 continued to trend downwards witnessing profit booking at higher levels. Both the indices have fallen about 0.4 each. The market breadth of the Nifty 50 index is biased towards declines. The volatility index- India VIX has gained 1.5 per cent to 25.3 levels. The Nifty mid and small-cap indices have declined 0.8 per cent and 0.3 per cent respectively. Top sectoral losers are Nifty PSU and PVT Bank indices which have slumped 2.3 per cent and 1.9 per cent respectively. Buying interest is seen in the Nifty Pharma, FMCG and IT indices which are trading in the positive terrain. Nifty Pharma has advanced 1 per cent.

The Nifty 50 July month contract started the session with a gap-down open at 10,772. After an initial rally to the intra-day high of 10,805 the contract encountered resistance at 10,800 and began to decline. The contract recorded an intra-day low at 10,696 and started to recover. Traders should tread with caution and as long as the contract trades below 10,770 levels, near-term stance will remain bearish. Fresh short positions can be initiated with a fixed stop-loss only if the contract declines below 10,700 with a fixed stop-loss. In that case, the contract can decline to 10,670 and then to 10,650. Next supports are at 10,630 and 10,600. On the other hand, a strong rally above 10,770 can witness a corrective rally to 10,800. A conclusive rally above 10,800 can take the contract higher to 10,823 and then to 10,850 levels.

Strategy: Trade with caution as long as the contract is range-bound between 10,700 and 10,770

Supports: 10,700 and 10,670

Resistances: 10,770 and 10,800

Published on July 10, 2020

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