Technical Analysis

Nifty call: Go long in dips with stoploss at 11,240

Akhil Nallamuthu BL Research Bureau | Updated on August 18, 2020

Nifty 50 August Futures (11,310)

The Indian benchmark indices today, look positive even as the major equity indices in Asia are showing bearish bias. The Nifty 50 and Sensex opened the day marginally higher and have inched up, though it has not rallied sharply. Broadly speaking, the indices are trading in a range since past few trading sessions.

Considering other major Asian indices, the Nikkei 225 ended today’s session with a minor loss of 0.2 per cent. While the Hang Seng index trades lower by 0.2 per cent, the Shanghai composite index is flat.

In domestic market, the market breadth of the index is favouring the bulls as the advance-decline ratio now stands at 33-17 and not only the benchmarks but also the mid-cap and small-cap indices are in the green as well. For instance, the Midcap 50 is up by 0.8 per cent whereas the Smallcap 50 is up by 1.2 per cent.

Among the sectoral indices, except the Nifty Pharma index (down by 0.3 per cent) and Nifty PSU index (down by nearly 0.2 per cent), all other indices have gained so far today. This is led by the Nifty Realty index, up by about 4.1 per cent and the Nifty Auto index, up by 1.1 per cent. As the broader market looks bullish, the volatility has dropped by 2 per cent today i.e. India VIX – the volatility index – has fallen to 20.9.

Post a gap-up open at 11,276, the August futures of the Nifty 50 marked an intraday high of 11,332 and has now softened to 11,310. The price action indicate that the contract is likely to move up and the broader positive sentiment of the market can help bulls to push up the price further. Given the scenario, traders can initiate fresh long positions in declines with stop-loss at 11,240. On the upside, the contract can rally to 11,375 and 11,400. A breakout of 11,400 can result in a sharp rally, possibly lifting the contract to 11,450 and 11,475.

Strategy: Go long in dips with stop-loss at 11,240

Supports: 11,275 and 11,250

Resistances: 11,375 and 11,400

Published on August 18, 2020

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