Technical Analysis

Nifty Call: Fresh long positions can be initiated on a strong rally above 10,500 

Yoganand D, BL Research Bureau | Updated on October 05, 2018

Nifty 50 October Futures (10,485)

Taking cues from the bearish global markets and weakness in domestic OMC stocks, the Sensex and the Nifty opened with a gap-down and continue to trend downwards.

Witnessing selling pressure in the OMC stocks as well as mid and small-cap stocks, the benchmark indices extended their fall in today's session as well. The market breadth of the Nifty index is biased towards declines. The India VIX gained 5.2 per cent to 19.90 levels.

Sectoral indices such as Nifty metal, media and PSU Bank indices tumbled between 2.5-3 per cent. However, Nifty IT index is trading in the green with a marginal gain of 0.35 per cent.

Nifty October month contract started the session with a gap-down, opening at 10,552. Following an initial rally to 10,588, the contract resumed its downtrend. While trending down, the contract has breached a key support at 10,500 and has recorded an intra-day low at 10,465 levels.

The contract is trading just above a key support at 10,450. Due to short-covering, a corrective up-move is possible in the near term. Hence, traders with a near-term view should tread with caution and consider taking long positions on a strong rally above 10,500 levels with a fixed stop-loss.

Such a move can take the contract higher to 10,530 and 10,555 levels. Next key resistances are placed at 10,580 and 10,600 levels. But a plunge below the key base level of 10,450 can pull the contract down to 10,425 and 10,400 levels.

Strategy: Fresh long positions can be initiated on a strong rally above 10,500 

Supports: 10,470 and 10,450

Resistances: 10,500 and 10,525

 

Published on October 05, 2018

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