Technical Analysis

Nifty call: Initiate longs on strong break above 15,950

Akhil Nallamuthu | Updated on July 15, 2021

All mid- and small-cap indices in the green

Nifty 50 July futures (15,945)

Following a positive close on Wednesday, the domestic equity benchmarks opened on the front foot and have been moving up steadily. The Nifty 50 and the Sensex, currently at 15,925 and 53,170, respectively, have gained nearly half a per cent. The local indices are in the green despite the major indices across Asia sending out mixed signals. While the Hang Seng and KOSPI have gained by 1.2 and 0.6 per cent, respectively, the ASX 200 and the Nikkei 225 have lost 0.3 and 1.2 per cent, respectively.

Buying seems to be broad-based as the advances-declines ratio of the Nifty 50 is currently at 30-20, and all the mid- and small-cap indices are in the green, gaining between 0.3 and 1.2 per cent. Nevertheless, volatility seems to be a bit higher today, as indicated by the India VIX – the volatility index. It is up by about 2 per cent to 12.85. Among the sectoral indices, the Nifty IT, up by 1.3 per cent, and the Nifty Bank index, up by about 0.8 per cent, are the top gainers, whereas the Nifty Auto and Media, down by 0.5 and 0.3 per cent, respectively, are the laggards.

Futures: Like the underlying Nifty 50 index, the July futures began the session with a minor gap-up at 15,879 and has been rallying so far. The contract is currently trading around an important level of 15,950. A clear breach of this level can trigger another leg of an uptrend, where the futures can ease past the psychological level of 16,000 and could touch 16,050. But, on the other hand, if sellers gain traction at the current level and drag the contract, the nearest supports it could find would be 15,900 and 15,850.

Considering that the intra-day trend is up and that the contract has a resistance at 15,950, traders can initiate fresh long positions if this resistance is decisively breached. Stop-loss can be at 15,900.

Strategy: Initiate longs on a strong break above 15,950

Supports: 15,900 and 15,850

Resistances: 16,000 and 16,050

Published on July 15, 2021

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