Technical Analysis

Nifty Call: Go long if contract moves above 11,700

Yoganand D BL Research Bureau | Updated on October 29, 2020

Nifty 50 October Futures (11,676)

Tracking bearish global cues, the domestic equity indices — the Sensex and the Nifty 50 — started the session with a gap-down open. Witnessing selling interest, the Dow Jones and S&P 500 had tumbled 3.4 per cent and 3.5 per cent, respectively, in the past session.

In Asia, the Nikkei 225 has slipped 0.3 per cent to 23,340 and Hang Seng index has declined 0.6 per cent in today's session. Following the gap-down open, the local benchmark indices recovered from the intraday lows but the indices are experiencing selling interest at higher levels. The market breadth of the Nifty 50 is biased towards declines.

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There has been an increase in volatility as the India VIX has gained 3.3 per cent to 24 levels. Both the Nifty mid- and small-cap indices are trading in the negative territory, down by 0.7 per cent and 0.9 per cent respectively. All the sectoral indices are trading in negative territory; the top losers are the Nifty Media and Nifty PSU Bank indices, which have fallen 1.9 per cent and 1.5 per cent, respectively.

The Nifty 50 October month contract commenced the derivative expiry session with a gap-down at 11,630. After marking an intraday low at 11,605 the contract took support from this level and began to rally. However, the contract encountered a key resistance at 11,700 and started to decline.

Traders should tread with caution as long as the contract trades below 11,700. Fresh long positions are recommended with a tight stop-loss at 11,685 on a strong rally above 11,700 levels. In that case, the contract can trend upwards to 11,725 and then to 11,750 levels. Next resistances are at 11,775 and 11,800 levels. On the other hand, the contract can retest the key support level of 11,600 on strong fall below 11,650 levels. Supports below 11,650 are at 11,630 and 11,600.

Strategy: Go long only if the contract decisively moves above 11,700 with fixed stop-loss 11,685 levels

Supports: 11,650 and 11,630

Resistances: 11,700 and 11,725

Published on October 29, 2020

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