Technical Analysis

Nifty call: Go long with stop-loss at 11,940

Akhil Nallamuthu | Updated on October 21, 2020

Nifty 50 October Futures (11,985)

The global equity market is buoyant today, and following the positive market sentiment, the Indian benchmarks have opened with a gap-up open.

Yesterday, the US market was bullish, and this has set the tone for today’s rally across Asia. The US benchmarks – the S&P 500 and the Dow Jones – closed with a gain of nearly half a per cent each. Among the Asian majors, the Nikkei 225 is up by 0.3 per cent, and the Hang Seng has gained 0.7 per cent.

While the Sensex is now trading up by nearly 1 per cent, the broader index Nifty 50 is trading higher by 0.8 per cent. The market breadth of the Nifty 50 is indicating a positive bias as the advance-decline ratio stands at 36-14. Volatility remains at around yesterday closing level, i.e. the volatility index – India VIX – is at 22.58

Like the benchmark indices, all the mid-cap and small-cap indices have gained in the range of 0.7 per cent to 1 per cent. This shows a broad-based buying, and so the rally will most likely be extended for the rest of the day. Among the sectoral indices, except the Nifty FMCG index, all other indices are in the green. The Nifty metal and realty indices, each up by 2.5 per cent, are the top gainers.

Following the underlying Nifty 50 spot index, the October futures contract opened with a considerable gap-up at 11,951 against yesterday’s close of 11,895. It then rallied and registered a high of 12,006, thereby testing the very crucial level of 12,000. Though this is a substantial hurdle, the contract is best placed to breach this level today as the overall equity market sentiment is positive.

Considering the above factors, traders can be bullish for intraday and initiate fresh long positions in declines with a stop-loss at 11,940. On the upside, the contract is likely to rally past 12,000-mark and move towards 12,050. If the momentum sustains, it can advance to 12,100. From the current level, notable support levels are 11,940 and 11,900.

Strategy: Go long with stop-loss at 11,940

Supports: 11,940 and 11,900

Resistances: 12,000 and 12,050

Published on October 21, 2020

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