Technical Analysis

Nifty call: Initiate fresh shorts on rallies with stop-loss at 12,200

Akhil Nallamuthu | Updated on January 22, 2020 Published on January 22, 2020

Nifty 50 January futures (12,160)

Despite positive cues from the Asian markets, the Indian benchmarks were on a downtrend in today’s session. The Nifty spot index and the Sensex spot index are down by around 0.35 per cent so far. But major Asian indices such as the Nikkei and Hang Seng have gone up by 0.7 per cent and 1.1 per cent respectively.

The market breadth of the Nifty 50 index hints at a bearish bias as 29 of the 50 stocks are trading lower. Indicating broad-based selling pressure, all sectoral indices are in the red except the Nifty IT index (up by 1.1 per cent) and the Nifty pharma index (up by 0.6 per cent). The worst performer is the Nifty auto index, down by nearly 1 per cent. Volatility has gone up today as shown by the volatility index – India VIX – which is up by 2.7 per cent to 16.3 levels.

Though the January futures contract of the Nifty index opened with a gap up, the contract has been witnessing considerable selling pressure. It opened at 12,245 versus its previous close of 12,203. After registering an intra-day high at 12,249, the contract began to tumble and slipped below the important support at 12,200. Thus, the contract might weaken further. Traders are advised to initiate fresh short positions on rallies, with stop-loss at 12,200.

 

Strategy: Initiate fresh shorts on rallies with stop-loss at 12,200

Supports: 12,130 and 12,100

Resistances: 12,200 and 12,230

 

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Published on January 22, 2020
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