Technical Analysis

Nifty call: Go long at 17,500

Akhil Nallamuthu | Updated on: Jan 03, 2022
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Nifty 50 January futures (17,560)

The Indian benchmark indices began the year on a positive note as both the Nifty 50 and Sensex saw a gap-up opening. Being the first trading session of this year, investors seem to be optimistic, and both the indices have rallied. The Nifty at 17,530 and Sensex at 58,865, both are up by about 1 per cent each.

Among the major Asian indices, ASX 200 and Nikkei 225, remain closed. While the KOSPI is up by 0.35 per cent, the Hang Seng is down by nearly 0.9 per cent.

The market breadth of the Nifty index is bullish as the advances-declines ratio stands at 40-10. Like the benchmarks, the mid- and small-cap indices are up between 0.9 and 1.4 per cent. Among the sectoral indices, barring the Nifty Pharma (down by 0.25 per cent) and the Nifty Healthcare (down by 0.2 per cent), all others are in the green. The Nifty Realty and Auto are the top performers, up by 1.7 and 1.4 per cent, respectively.

Futures: The January futures of the Nifty opened the session higher at 17,443 versus Friday’s close of 17,410. Since then, it has been rallying and is now hovering around 17,560. The contract has thus crossed over the important level of 17,500 and could remain bullish for the day. The nearest resistance can be seen at 17,625 and 17,700. Notably, 17,700 is a strong hurdle and the likelihood of a rally above this level today is less likely. On the downside, supports can be spotted at 17,500 and 17,375.

Since the price action is positive and the buying seems to be broad-based, the contract can stay positive today. So, traders can consider fresh long positions. Buy the contract at current levels and accumulate when the price moderates to 17,500. Place stop-loss at 17,400. Liquidate the longs when the contract rallies to 17,700.

Strategy: Go long now and add longs when the price softens to 17,500. Place stop-loss at 17,400. Exit the longs at 17,700.

Supports: 17,500 and 17,400

Resistances: 17,625 and 17,700

Published on January 03, 2022

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