Technical Analysis

The Nifty call: Nifty 50 November Futures (13,010)

Akhil Nallamuthu | Updated on November 25, 2020 Published on November 25, 2020

BL Research Bureau

The Indian equity benchmark indices, after opening with a gap-up, could not rally and have started moving south. Both the indices have given up the intraday gains and are now trading lower by around 0.5 per cent each. This is despite the Asian market signaling positive cues i.e. the Nikkei 225 gained 0.5 per cent whereas the Hang Seng is up by 0.4 per cent for the day.

Following a decline in the index, the market breadth of Nifty 50 has turned bearish i.e. the advance-decline ratio stands at 16-34. As the market is down, the volatility has shot up as indicated by the volatility index – India VIX – which is up by a little over 9 per cent to 22.97.

The mid-cap and the small-cap indices too have lost between 0.6 per cent and 1.1 per cent. Among the sectoral indices, the Nifty PSU bank index is the top gainer, up by nearly 2 per cent even though most of the sectoral indices are in the red. The Nifty pharma index is the top loser, down by 1.3 per cent.

Like the Nifty 50 spot index, the November futures of the index begun the session higher at 13,130 versus its previous close of 13,062. But after marking an intraday high of 13,137, the contract started to decline. As a result, it slipped below yesterday’s closing level and is currently testing the key support of 13,000. A breach of this level can intensify the rally. But since the overall trend is bullish, one can wait for confirmation to initiate fresh short positions even though the intraday trend looks bearish.

That is, traders can wait for now and short the contract only if it decisively breaches the support of 13,000. Stop-loss can be placed at 13,060. On the downside, the contract can drop to 12,960 – a considerable support. Subsequent support levels are at 12,925 and 12,900. Nearest resistance from the current levels are at 13,060 and 13,100.

Strategy: Sell the contract if it breaches the support of 13,000

Supports: 12,960 and 12,925

Resistances: 13,060 and 13,100

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Published on November 25, 2020
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