Technical Analysis

Nifty call: Go long if contract breaches 11,575

Akhil Nallamuthu BL Research Bureau | Updated on September 14, 2020 Published on September 14, 2020

Nifty 50 September Futures (11,545)

Following the positive cues from Asian market, the Indian benchmark indices have been rallying after opening with a considerable gap-up. The Nifty 50 and Sensex indices are now up by three-fourth of a per cent. Among the major Asian indices, the Nikkei 225 rallied by 0.65 per cent, whereas Hang Seng up by 0.5 per cent.

The market breadth of Nifty 50 index indicates a bullish sentiment, as the advance-decline ratio stands at 35-15. Also, all the mid-cap and small-cap indices have been witnessing a strong rally today as they have gained between 2.3 per cent to 5.7 per cent so far. Moreover, except the Nifty FMCG index (down by 0.3 per cent) and Nifty pharma index (down by 0.2 per cent) all other sectoral indices have gained today. Top gainers are the Nifty IT index, up by 4.5 per cent and the Nifty realty index, up by 3.9 per cent.

These factors show that the buying is broad-based and is likely to remain so for the rest of the day, potentially advancing from here. As the market is bullish, the volatility has come down. India VIX – the volatility index – is down by a little over 2 per cent to 20.7.

The September futures of the Nifty 50 opened substantially higher at 11,518 versus Friday’s close of 11,467. Following that the contract rallies and marked an intraday high of 11,568. It has now moderated to 11,540 levels. Since 11,575 is a resistance, the contract might struggle to cross over that level. Considering this, despite the trend being bullish, traders can wait for now and initiate fresh long positions if only the contract breaches the resistance of 11,575. Stop-loss can be at 11,525. Above 11,575, the contract can advance to 11,630 and 11,675.

Strategy: Go long if the contract breaks out of 11,575

Supports: 11,525 and 11,500

Resistances: 11,630 and 11,675

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Published on September 14, 2020
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