Technical Analysis

Nifty 50 September Futures (17,850)

Akhil Nallamuthu | Updated on September 27, 2021

Both the indices are below the important levels – 18,000 for the Nifty and 60,000 for the Sensex

BL Research Bureau

Major Asian indices are trading with a positive bias today with the ASX 200 gaining 0.6 per cent, the Hang Seng, up by 0.4 per cent and the KOSPI rising 0.2 per cent. Nevertheless, the Nikkei 225 was trading flat. Against this backdrop, the Indian benchmark indices opened with a gap-up. However, both Nifty 50 and the Sensex have given up the gains and are down by nearly 0.2 per cent each currently. While the Nifty is at 17,825, the Sensex is at 59,960. Both the indices are below the important levels – 18,000 for the Nifty and 60,000 for the Sensex.

The market breadth of the Nifty 50 does not provide a clear indication as the advance-decline ratio is now equally split i.e., 25-25. Like the benchmark indices, all the mid- and small-cap indices are in the red, losing between 0.25 and 0.5 per cent. Besides, the volatility has gone higher – the India VIX, the volatility index, is up by 4.7 per cent to 17.73 and this is synonymous with a bear trend. This being an expiry week, traders should exercise extra caution.

But the sectoral indices look mixed – the Nifty Realty index is the biggest gainer, up by 2.2 per cent followed by the Nifty Auto index, up by 1.5 per cent. On the other hand, the Nifty IT is the top loser, down by 2.9 per cent followed by the Nifty Healthcare index, down by 1.4 per cent.

Futures: The September futures of the Nifty 50 opened with a significant gap-up i.e., at 18,088 versus Friday’s closing price of 17,853. However, the contract has been on a decline right from the session open with 18,088 being the intraday high. It dropped below the psychological level of 18,000 and slipped below the support level at 17,900 and is currently hovering around 17,850.

The contract has a strong support at 17,825 and until it stays above this level, the bulls will have chances of taking back control. In such case, the contract can be expected to rise to 17,900, a breakout of which can lift it further up to 18,000. But if the futures fall below 17,825, the possibility of another leg of a downtrend will increase wherein the bears can drag the contract to the next support at 17,780. Subsequent support is at 17,750.

While the bias is clearly bearish, as mentioned above, 17,825 is a support. Hence, traders can wait for now and initiate fresh short positions if the contract breaks below 17,825 and look for targets at 17,780 and 17,750. Stop-loss can be placed at 17,875, which can act as an intraday resistance.

Strategy: Initiate short below 17,825 with stop-loss at 17,875

Supports: 17,825 and 17,780

Resistances: 17,875 and 17,900

Published on September 27, 2021

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