Technical Analysis

Nifty call: Go long on a strong rally above 11,150 with a fixed stop-loss

Yoganand D BL Research Bureau | Updated on August 05, 2020

Nifty 50 August Futures (11,133)

The Sensex and the Nifty 50 commenced the session with a gap-up open despite mixed cues from the Asian markets. The Nikkei 225 has fallen 0.3 per cent to 22,514 and Hang Seng index has climbed 0.4 per cent to 25,056 levels.

Following an initial rally the domestic benchmark indices started to witness selling interest at higher levels and briefly slipped into negative territory. But, the benchmark indices remain marginally positive. The market breadth of the Nifty 50 index is biased towards advances. The volatility index — India VIX — has declined 1 per cent to 23.5 levels.

Both the Nifty mid and small-cap indices have advanced 0.9 per cent and 1 per cent, respectively. The Nifty metal index is the top gainer that has gained 3.3 per cent backed by a strong rally in the stocks of Hinadalco (6 per cent) and Tata Steel (4.7 per cent). Selling interest is seen in the Nifty FMCG and Pharma indices, which have declined 0.23 per cent each.

The Nifty 50 August month contract started the session on a positive note, opening at 11,131. After an initial rally, the contract registered an intra-day high at 11,226. But experiencing selling interest at higher levels the contract started to decline. Key resistance at 11,150 is limiting the upside. An emphatic break above this level will reinforce the bullish momentum and take the contract northwards to 11,175 and then to 11,200.

Next key resistances are pegged at 11,225 and 11,250. On the downside, the key supports below 11,100 are placed at 11,070 and 11,050 levels.

Strategy: Go long on a strong rally above 11,150 with a fixed stop-loss

Supports: 11,100 and 11,070

Resistances: 11,150 and 11,175

Published on August 05, 2020

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