Technical Analysis

Nifty call: Buy the contract if price breaks out of 11,610

Akhil Nallamuthu | Updated on October 06, 2020 Published on October 06, 2020

Nifty 50 October futures (11,592)

The domestic benchmark indices opened Tuesday’s session with a considerable gap-up. Following this, the indices have been moving sideways. The Nifty 50 and the Sensex indices are currently trading higher by about 0.8 per cent.

The domestic equity market seems to have taken cues from the Asian markets, which have looked positive. The Nikkei 225 has gained 0.5 per cent and the Hang Seng is up by 0.8 per cent.

The market breadth of the Nifty 50 index is inclined to positive sentiment as the advances-declines ratio stands at 35-15. Volatility remains around yesterday’s closing level i.e. India VIX – the volatility index – is now at 19.75.

Like the benchmarks, the mid-cap and small-cap indices are trading with a gain of between 0.5 per cent and 0.85 per cent. Among the sectoral indices, apart from the Nifty IT index (down by one per cent) and the Nifty metal index (down by half a per cent), all other indices are in the green. The Nifty financial services index and the Nifty realty index are the top performers, up by 2.2 per cent each.

The October futures contract of the Nifty 50 index began today’s session significantly higher at 11,582 versus yesterday’s closing level of 11,517. It then rallied and marked an intra-day high of 11,613 during the initial hour of trade. But then, the contract began to trade sideways, and has largely been oscillating in the band between 11,570 and 11,610. So, even though the trend is bullish, traders can wait for fresh a breakout before initiating long positions.

Buy the contract if it breaks out of 11,610 with a stop-loss at 11,570. Above 11,610, the contract can rally to 11,675 and then to 11,700. Nearest supports from the current levels are at 11,570 and 11,525.

Strategy: Buy the contract if the price breaks out of 11,610

Supports: 11,570 and 11,525

Resistances: 11,675 and 11,700

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Published on October 06, 2020
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