Technical Analysis

Nifty call: Buy on declines with stop-loss at 11,850

Akhil Nallamuthu | Updated on October 09, 2020 Published on October 09, 2020

Nifty 50 October futures (11,900)

Major Asian indices are trading with a downward bias even though the US markets closed in the green on Thursday. The Nikkei 225 lost 0.1 per cent today and the Hang Seng is down by half a per cent so far.

Against this backdrop, the Indian benchmark indices began the session higher. While the Nifty 50 is up by 0.6 per cent, the Sensex has moved up by 0.75 per cent until now.

Interestingly though, the advances-declines ratio of the Nifty 50 index at 23-27 shows that today’s uptrend is not broad-based. Volatility has gone up as well, despite the benchmark indices moving up. India VIX – the volatility index – is up by a little over one per cent to 20.6.

The mid-cap and the small-cap indices look flat for the day even as the benchmarks have gained. Among the sectoral indices, the Nifty private bank index is the top gainer, up by 2 per cent. Consequently, the Nifty bank index has gone up by about 2 per cent. The Nifty pharma index, down by nearly 1 per cent, is the top loser.

The October futures contract of the Nifty 50 index witnessed a gap-up open at 11,864 versus Thursday’s close of 11,831. Post the open, the contract rallied and marked an intra-day high of 11,935. It then softened towards the current level of 11,900. The trend is up, and the contract price is likely to rise from here. Hence, traders can buy the contract with a stop-loss at 11,850. On the upside, a rally above 11,935 can lift the contract to 12,000 – a psychological level.

Strategy: Buy on declines with stop-loss a at 11,850

Supports: 11,875 and 11,850

Resistances: 11,935 and 12,000

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Published on October 09, 2020
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