Technical Analysis

Nifty call: Initiate fresh short positions on rallies with stop-loss at 11,650

Akhil Nallamuthu | Updated on February 27, 2020 Published on February 27, 2020

Nifty 50 February futures (11,580)

The global equity markets continue to face selling pressure. The Indian benchmarks have also extended their downtrend in today’s session. The Nifty spot and the Sensex spot indices are down by 0.9 per cent and 0.8 per cent respectively.

The major Asian indices such as the Nikkei and Hang Seng, too, are witnessing selling pressure. While the Nikkei closed today’s session with a 2.1 per cent loss, the Hang Seng is down by 0.4 per cent. On the contrary, the Chinese indices are marginally higher today.

The market breadth of the Nifty 50 index clearly indicates a bear trend as 43 of the 50 stocks have been on a decline so far. The mid-cap and small-cap indices, too, are in the red, each losing more than one per cent. Moreover, all the sectoral indices have dropped, led by the Nifty media index, which is down 2.8 per cent. Other noticeable losses have been in the Nifty realty index and the Nifty PSU Bank index, which are down by 2.7 per cent and 2.5 per, cent respectively. There are indications of broad-based selling and a quick recovery seems less likely.

Also, volatility is up by 1.6 per cent today compared to yesterday’s close, as indicated by India VIX – the volatility index. Today, it went up to 19.15 and is currently at 18.55 levels. These levels were last observed in May last year, and are generally associated with selling pressure.

The February futures contract of the Nifty index opened lower at 11,665, compared to yesterday’s close of 11,695. The contract has been declining since the session open, and has slipped below the important level of 11,600. The contract is clearly under selling pressure. Traders can initiate fresh short positions on rallies, with stop-loss at 11,650.

Strategy: Initiate fresh short positions on rallies with stop-loss at 11,650

Supports: 11,540 and 11,500

Resistances: 11,600 and 11,640

Published on February 27, 2020
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