Technical Analysis

Nifty call: Buy in intraday dips with stop-loss at 11,870

Akhil Nallamuthu | Updated on October 20, 2020

Nifty 50 October Futures (11,930)

The US market closed with a considerable loss in the past session and following this, the Asian markets too look to be under pressure. The US benchmarks, the S&P 500 and Dow Jones posted a loss of 1.4 per cent and 1.6 per cent, respectively. Among the Asian majors, the Nikkei 225 lost nearly half a per cent whereas the Hang Seng is trading lower by 0.2 per cent.

Interestingly, despite the negative cues, the Indian benchmark equity indices have gained today so far. The Nifty 50 and the Sensex are up by 0.5 per cent and 0.6 per cent, respectively.

The market breadth of the broader Nifty 50 index is showing positive bias as 30 out of the 50 stocks in the index have gained. India VIX – the volatility index – is up by 1.5 per cent to 22.15, showing that the volatility has increased today even as the sentiment is bullish.

Like the Nifty 50, the mid-cap and the small-cap indices are in the green, gaining between 0.2 per cent and 0.5 per cent. Most of the sectoral indices are up today led by the Nifty realty index, up by 2 per cent followed by the Nifty media index, up by 1.8 per cent. The Nifty PSU bank index, which was among the top performers yesterday, is the biggest loser today by losing 1.4 per cent.

The October futures of the Nifty 50 index, after opening lower at 11,855 as against its previous close of 11,889, has been rising since open. It has registered an intraday high of 11,945 and has slightly moderated to 11,930. The overall trend is positive, and the contract is likely to extend the gain from here. Hence, traders can go long in the contract in declines with stop-loss at 11,870.

The immediate resistance from the current level is the psychological level of 12,000. A breakout of this level can lift the contract to 12,050. Supports from the current level are at 11,900 and 11,870.

Strategy: Buy in intraday dips with stop-loss at 11,870

Supports: 11,900 and 11,870

Resistances: 12,000 and 12,050

Published on October 20, 2020

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