Technical Analysis

Nifty call: Buy on dips with fixed stop-loss at 11,270 levels

Yoganand D | Updated on August 12, 2020 Published on August 12, 2020

Nifty 50 August futures (11,314)

The Sensex and Nifty 50 started Wednesday’s session with a gap-down open despite positive cues from the Asian markets. The Nikkei 225 has climbed 0.4 per cent to 22,842 levels and Hang Seng index has gained 0.8 per cent to 25,084 levels in today's session.

Following the gap-down open, the domestic benchmark indices are on a recovery path and have almost trimmed their intra-day loss to 0.1 per cent. But the market breadth of the Nifty 50 index is biased towards declines.

The India VIX has slipped 1 per cent to 21.1 levels. Both the Nifty mid and small-cap indices have advanced marginally by 0.3 per cent and 0.15 per cent respectively. Witnessing buying interest, the Nifty media and Nifty PSU Bank indices have jumped more than 3 per cent. The Nifty Auto and Nifty Bank are the other sectoral indices trading in positive territory. Selling pressure is seen in Nifty Pharma and metal indices that have slipped 1.8 per cent and 1.3 per cent, respectively.

The Nifty 50 August month index futures started the session with a gap-down open at 11,237. After registering an intra-day low at 11,231, the contract began to recover. It has trimmed its intra-day losses to 0.25 per cent. The contract has moved above a key resistance level of 11,300.

Traders can make use of intra-day dips to buy the contract, while maintaining a stop-loss at 11,270. A strong rally above the immediate resistance level of 11,325 can take the contract higher to 11,350 and then to 11,375 levels. The next crucial resistance is at 11,400. Conversely, if the contract declines below 11,275, it can witness selling interest and drag the contract down to 11,250 and then to 11,230 levels. In that case, avoid taking fresh long positions.

Strategy: Buy on dips with a fixed stop-loss at 11,270 levels

Supports: 11,275 and 11,250

Resistances: 11,325 and 11,350

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Published on August 12, 2020
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