Technical Analysis

Nifty Call: Nifty 50 October Futures (18,340)

Akhil Nallamuthu BL Research Bureau | Updated on October 20, 2021

Sell the contract at current level of 18,340 and at 18,370; keep stop-loss at 18,410

Despite the Asian markets trading positively, the Indian market has moved the other way and the equity benchmarks — the Nifty 50 and the Sensex — are down by about 0.5 per cent each. Whereas in Asia, the Nikkei 225, the ASX and the Hang Seng indices are up by 0.2, 0.5 and 1 per cent respectively.

Indicating a broader sell-off, the advance-decline ratio stands at 14-36 and all the mid- and small-cap indices are in the red. Besides, the volatility seems to have shot up today – India VIX is up by over 5 per cent, a bearish signal. Moreover, among the sectoral indices, most of them are in the red. The Nifty Metal and Consumer durable index are the top losers, down by 2.1 per cent each. On the other hand, the Nifty PSU bank (up by 1.5 per cent) and the Nifty Media (up by 0.7 per cent) are the two indices that have gained today.

Futures: The October futures of the Nifty 50 index opened the session flat at 18,430 as against yesterday’s close of 18,432. While it marked an intraday high of 18,466, the contract made a U-turn and declined to the current levels of 18,340. The price action looks bearish and the likelihood of further decline as the sell-off seems to be broad-based today.

So, traders can short Nifty futures with stop-loss at 18,400. On the downside, the contract is likely to touch the nearest support of 18,280. Subsequently it can decline to 18,250. A breach of this level can drag the contract to 18,200. But in case if the contract regains traction and goes up, it can face hurdles at 18,370 and 18,400. Resistance above this level is at 18,450.

Strategy: Sell the contract at current level of 18,340 and at 18,370; keep stop-loss at 18,410. Partially exit at 18,280 and the rest at 18,250

Supports: 18,280 and 18,250

Resistances: 18,370 and 18,400

Published on October 20, 2021

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