Technical Analysis

Nifty call: Buy on declines, while maintaining stop-loss at 9,085 levels

Yoganand D | Updated on May 27, 2020

Nifty 50 May futures (9,130)

The Sensex and Nifty began the session on a positive note in the midst of mixed Asian markets and a positive close in US markets in the last session. The Dow Jones jumped 2.2 per cent to 24,995 levels and the S&P 500 advanced 1.2 per cent to 2,991 levels in the previous session. Asian markets had a mixed reaction; the Nikkei 225 climbed 0.7 per cent to 21,419 levels, whereas the Hang Seng index slumped 0.9 per cent to 23,161 levels.

After an initial decline, the Sensex and Nifty resumed their up-move and have gained more than 1 per cent so far. The market breadth of the Nifty index is biased towards advances. The India VIX has declined 2.3 per cent to 30.7 levels. Both the Nifty mid and small-cap indices are trading in marginally positive territory. The Nifty Bank index, the top gainer, has jumped 3 per cent, backed by the Nifty PVT Bank index that has climbed 3.6 per cent. Nifty Media and FMCG have declined 0.8 per cent and 0.4 per cent respectively.

The Nifty futures May month contract commenced the session with a gap-up open at 9,078. Following an initial decline, the contract recorded an intra-day low at 8,988 levels and ha since resumed its up-move. The contract breached key resistance at 9,100 and marked an intra-day high at 9,147 levels. The near-term outlook stays positive as long as the contract trades above 9,100 levels. Traders can make use of intra-day dips to buy the contract, while maintaining a stop-loss at 9,085 levels.

A decisive break above 9,150 can take the contract higher to 9,175 and then to 9,200 levels. Key supports below 9,100 are at 9,050 and 9,035. A decisive fall below 9,035 can bring back selling interest and pull the contract down to 9,000. Subsequent supports are at 8,980 and 8,950.

Strategy: Buy on declines, while maintaining stop-loss at 9,085 levels

Supports: 9,100 and 9,050

Resistances: 9,150 and 9,175

Published on May 27, 2020

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