Technical Analysis

Nifty call: Sell on rallies with stop-loss at 9,200

Akhil Nallamuthu | Updated on May 26, 2020

Nifty 50 May Futures (9,100)

The Indian benchmark indices, after opening with a gap-up, have declined since the open. The Nifty spot and the Sensex spot indices are trading higher by a little over 0.5 per cent, after having rallied over one per cent each.

Both the indices gave up some of their gains despite positive cues from the Asian markets. While the Nikkei index posted a gain of 2.5 per cent today, the Hang Seng and Shanghai composite index have gained 2 per cent and 1 per cent, respectively.

The market breadth of the Nifty 50 index indicates a bearish bias as 37 of the 50 stocks are in the red. But the mid-cap and small-cap indices, like the benchmark indices, are trading higher. Among the sectoral indices, the Nifty metal index is the top performer, up by 2.7 per cent, whereas the Nifty media index is the top loser, down by 0.8 per cent. A comforting factor is the drop in volatility. India VIX, the volatility index, has dropped by 3.5 per cent to 31.1 levels.

The May futures contract of the Nifty index opened the session on the front foot at 9,122 versus Friday’s closing price of 9,027. After registering an intra-day high of 9,162, it has moderated, currently trading around 9,100. The contract could remain bearish as long as it stays below 9,200 and the price action hints at a further intra-day decline. So, traders can initiate fresh short positions on rallies with stop-loss at 9,200.

Strategy: Sell on rallies with stop-loss at 9,200

Supports: 9,065 and 9,000

Resistances: 9,160 and 9,200

Published on May 26, 2020

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