Technical Analysis

Nifty call: Go short if contract breaks below 13,685

Akhil Nallamuthu BL Research Bureau | Updated on December 21, 2020 Published on December 21, 2020

Nifty 50 December Futures (13,700)

The Indian benchmark indices opened the day lower following weak Asian markets. While the Nifty 50 and the Sensex are down by over 0.33 per cent, major Asian indices Nikkei 225 and Hang Seng are down about 0.2 per cent and 0.5 per cent, respectively.

Also read: Sensex down 350 points on fresh sell-off

Affirming the bearish inclination, the advance-decline ratio of the Nifty 50 stands at 16-34. Also, the volatility has shot up today; India VIX — the volatility index — has gone up over 5 per cent to about 19.63.

Similar to the benchmarks, all the mid- and small-cap indices too are in the red, where they have lost between 0.1 per cent and 0.8 per cent so far. Among the sectoral indices, the Nifty IT (up by 0.7 per cent), pharma (up by 0.3 per cent), and realty (up by 0.2 per cent) are those hovering in the green whereas all other sectors are facing downward pressure. The Nifty PSU bank index, down by about 1.4 per cent, is the top loser followed by the Nifty private bank index, down by nearly 1.3 per cent. This means, banking stocks seem to be in focus today.

Also read: Index Outlook: Sensex, Nifty 50 stretch the rally

Like the underlying Nifty 50 spot index, the December futures contract of the index opened with a gap-down at 13,732 versus Friday’s close of 13,774. It then dropped to mark an intraday low of 13,688 and has now recouped some of its losses and is trading near 13,700. While this level can be a support, a decisive breach of this level can attract more sellers. Given the prevailing price action, traders can wait for now and initiate fresh positions if the contract breaks below 13,685. Stop-loss can be placed at 13,750.

Strategy: Go short if the contract breaks below 13,685

Supports: 13,650 and 13,600

Resistances: 13,750 and 13,785

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Published on December 21, 2020
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