Technical Analysis

Nifty Call: Buy on declines with stop-loss at 12,080

Akhil Nallamuthu BL Research Bureau | Updated on February 11, 2020 Published on February 11, 2020

Nifty 50 February Futures (12,150)

The Indian benchmarks rebounded today after facing downward pressure during the last two trading sessions. Both the indices, i.e., the Nifty spot and the Sensex spot, gained by 0.8 and 0.7 per cent respectively.

All the major Asian indices are also trading in the green today. While the Hang Seng index is up by 1.4 per cent, the Dow Jones Shanghai index is up by 0.4 per cent.

The market breadth of the Nifty 50 index is hinting a considerable bullish bias as the advance-decline ratio stands at 41-9. The mid-cap and the small-cap indices too have gained in today’s session. Moreover, all sectoral indices are up so far today, led by the Nifty media index (up by 1.7 per cent) followed by the Nifty metal index (up by 1.4 per cent).

These factors indicate a broad-based bull trend. Corroborating the positive intra-day outlook, the volatility, as measured by India VIX – the volatility index, has dropped by around 2.5 per cent today; a decline in volatility in general is associated with bull trend.

The February futures contract of the Nifty index opened higher at 12,105 against yesterday’s close of 12,040. After registering an intra-day high of 12,185, it is currently trading near 12,150. Post a gap up open, the contract has breached the resistance at 12,100 and has been gaining. It has also rallied past the 61.8 per cent Fibonacci retracement level of the previous downswing at 12,123.

Since the buying seems to be broad-based and there are indications of good upside momentum, traders are recommended to initiate fresh long positions on decline with a stop-loss at 12,080.

Strategy: Buy on declines with a stop-loss at 12,080

Supports: 12,100 and 12,080

Resistances: 12,200 and 12,245

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Published on February 11, 2020
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