Technical Analysis

Nifty call: Sell on rallies with stop-loss at 14,700

Akhil Nallamuthu | Updated on February 26, 2021

Nifty 50 March futures (14,635)

Markets globally are painted red today. After the US market closed with significant losses, the Asian markets have been in a sea of red since morning. By taking negative cues, the Indian benchmark indices, too, opened on a weak note and have been on the decline. The Nifty 50 and the Sensex are now down by 3.4 per cent each.

Among the Asian majors, the Nikkei 225 and the Hang Seng lost 4 per cent and 3.3 per cent, respectively. In the last session, the S&P 500 and the Dow Jones ended with a loss of 2.5 per cent and 1.8 per cent, respectively.

The market breadth of the Nifty 50 indicates extreme bearishness as the advances-declines ratio stands at 1-49. Volatility, as well, has shot up substantially, something that is synonymous with the bear trend.

Like the benchmark indices, all the mid- and small-cap indices have lost and similarly, all the sectoral indices are down considerably. The banking sector is the hardest hit today as the Nifty private bank index and the Nifty bank index are the top losers, down by 4.7 per cent each. Likewise, the Nifty financial services index has lost 4.6 per cent.

Futures: The March futures contract of the Nifty 50 index began the session with a gap-down at 14,948 compared to last session’s close of 15,169. Since the beginning of the session, the contract has been witnessing a strong sell-off. The contract went below the previous low of 14,687 and made a fresh low of 14,550, and is currently trading around 14,635. The sell-off looks broad-based and so the chances of the extension of the downtrend are high.

Hence, traders can initiate fresh short positions on rallies with a stop-loss at 14,700. The nearest support levels from the current levels can be seen at 14,550 and 14,500 with subsequent support at 14,420. Immediate resistance levels from the current levels are at 14,700 and 14,750.

Strategy: Sell on rallies with a stop-loss at 14,700

Supports: 14,550 and 14,500

Resistances: 14,700 and 14,750

Published on February 26, 2021

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