Technical Analysis

Nifty 50 March Futures (7,700)

Akhil Nallamuthu, BL Research Bureau | Updated on March 23, 2020 Published on March 23, 2020

The equity markets have been facing significant downward pressure since morning. Taking cues from the Asian markets, the Indian benchmark indices are trading lower today. The Nifty spot and the Sensex spot indices are down by a little over 11 per cent so far. While the Shanghai composite index has lost nearly 3 per cent, the Hang Seng index is trading lower by 5 per cent today. On the contrary, the Nikkei index gained nearly 2 per cent.

The market breadth of the Nifty 50 index is giving extreme bearish bias as advance-decline ratio is at 0-50 i.e. all the stocks in the index are in the red. Like the benchmarks, all the mid-cap and small-cap indices has lost over 10 per cent today. Similarly, all the sectoral indices have posted loss, led by the Nifty PVT bank index, down by nearly 15 per cent. This is followed by the Nifty financial services index and the Nifty auto index, down by about 13 per cent each. The volatility has shot-up by over 6 per cent. India-VIX, the volatility index is at 71.6 levels.

The March futures contract of the Nifty index opened with a huge gap-down, at 7,850 versus its previous close of 8,723. The contract fell further and went below last week’s low of 7,816. After registering an intraday low of 7,575, it has recovered marginally to the current market price of 7,700. The price band between 7,832 and 7,850 is critical and until the contract trades below these levels, the possibility of a rally is low.

Currently trading at 7,700, the contract has breached the important support levels at 7,832 and 7,764 in today’s session, opening the door for further weakness. The market is very volatile demanding wider stop-loss for fresh positions. Considering the prevailing market conditions, traders with higher risk appetite can short the contract on rallies with stop-loss at 7,800.

Strategy: Sell on rallies with stop-loss at 7,800

Supports: 7,600 and 7,575

Resistances: 7,764 and 7,800

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Published on March 23, 2020
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