Technical Analysis

Nifty call: Sell on rallies with fixed stop-loss

Yoganand D | Updated on March 30, 2020

Nifty 50 April futures (8,400)

Both the Sensex and Nifty began the session with a gap-down open, taking weak cues from the Asian markets. The Nikkei 225 index has slumped 1.6 per cent to 19,084 and the Hang Seng index has declined 0.86 per cent to 23,283 levels. The Sensex and the Nifty have plunged over 2.5 per cent each. The market breadth of the Nifty index is biased towards declines. On the other hand, the India VIX has jumped 2.45 per cent to 72.1 levels. The Nifty mid and small-cap indices have fallen 2.4 per cent and 1.6 per cent respectively. Among the sectoral indices, only Nifty FMCG and Pharma are hovering in positive territory, gaining 0.6 per cent and 1.1 per cent. The Nifty Auto, Financial services, Realty have tumbled more than 4 per cent.

The April month contract commenced the session with a gap-down open at 8,440 and registered an intra-day low at 8,395. But, the contract staged an initial rally and marked an intra-day high at 8,640 levels. Witnessing selling interest at higher levels, it resumed the downtrend. While trending down, the contract breached a key support at 8,500 levels and tests this levels.

The near-term stance remains bearish as long as the contract trades below the key level of 8,600. A rally above 8,500 can be a corrective rally and the contract can test subsequent resistances at 8,560 and 8,600 levels. A strong break above 8,600 will bring back bullish momentum and take the contract higher to 8,640 and then to 8,700 levels. A fall below the immediate support level of 8,430 can drag the contract down to 8,400 and then to 8,380.

The next key supports are placed at 8,350 and 8,300 levels. Traders should tread with caution as long as the contract trades below 8,600 levels. Sell on rallies with a fixed stop-loss.

Strategy: Near-term view stays bearish below 8,600 levels. Sell on rallies with a fixed stop-loss

Supports: 8,400 and 8,380

Resistances: 8,500 and 8,560

Published on March 30, 2020

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