Technical Analysis

Nifty Call: Contract is range-bound, so tread with caution

Yoganand D BL Research Bureau | Updated on August 07, 2020 Published on August 07, 2020

Fresh long positions can be initiated on a strong rally above 11,220

Nifty 50 August Futures (11,202)

Taking cues from weak Asian markets, the Sensex and the Nifty 50 commenced the session with a gap-down open. The Nikkei 225 index has fallen 0.4 per cent to 22,329 and Hang Seng index has plunged 1.9 per cent to 24,443 levels in today's session.

Without any major movement, both the Sensex and the Nifty 50 are trading sideways in a narrow range. The market breadth of the Nifty 50 index is biased towards advances.

The India VIX has slumped 1 per cent to 22.9 levels, indicating an increase in volatility. Outpacing the bellwether indices, the Nifty mid and small cap indices have jumped 1.5 per cent and 0.8 per cent, respectively. Sectoral indices are mixed today, and selling interest is seen in the Nifty IT and Pharma indices, that have slumped 0.9 per cent each. On the other hand, the Nifty Auto and PSU Bank have advanced 0.98 per cent and 0.8 per cent, respectively.

The Nifty 50 August futures commenced the session with a gap-down open at 11,161. After registering an intra-day low at 11,142 the contract bounced up and surpassed a key resistance at 11,200. But marking an intra-day high at 11,234, the contact started to decline and it now tests the key level of 11,200. The contract is range-bound between 11,175 and 11,220.

As long as the contract trades in this range, traders should tread with caution. Fresh long positions can be initiated on a strong rally above 11,220 with a fixed stop-loss. Such an up-move can take the contract higher to 11,250 and then to 11,275 levels. On the downside, a fall below 11,175 can bring back selling pressure and pull the contract down to 11,150 and then to 11,120 levels.

Strategy: The contract is range-bound. Tread with caution

Supports: 11,175 and 11,150

Resistances: 11,220 and 11,250

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Published on August 07, 2020
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