Technical Analysis

Nifty call: Sell the contract with stop-loss at 8,950

Akhil Nallamuthu | Updated on April 08, 2020 Published on April 08, 2020

BL Research Bureau

Nifty 50 April Futures (8,775)

The Indian benchmarks, which gained earlier in today’s session, has given up the gains. The Nifty spot and the Sensex spot indices are currently hovering at yesterday’s closing level.

The US market closed marginally lower yesterday, and following that, major Asian indices like the Shanghai Composite and the Hang Seng have dropped 0.3 per cent and 1.5 per cent respectively. On the contrary, the Nikkei has gained a little over 2 per cent. Thus, the cues are mixed from the Asian majors.

The market breadth of the Nifty 50 index shows a bullish bias as 30 out of the 50 stocks in the index are in the green. The mid-cap and small-cap indices are up as well. But among the sectoral indices, few are trading lower today. The Nifty Pharma index is the top gainer, up by 3.2 per cent and the Nifty Realty index is the top loser, down by 0.6 per cent so far.

But as a sign of caution, the number of stocks that had gained since morning is coming down and many indices are giving up gains. Moreover, the volatility has gone up by 1.5 per cent today. India VIX, the volatility index has risen to 52.5 levels.

The April futures contract of the Nifty index opened lower at 8,748 compared to its previous close of 8,875. After registering an intraday low of 8,701, which is a support, the contract started to rally. But after making an intraday high of 9,144 it began to decline. The contract has given up the entire gain it made since morning, meaning there is a considerable selling pressure as it goes up. In fact, it is now trading lower for the day by about one per cent at 8,775. In the daily chart, resistance levels are seen at 8,920 (21-day moving average) and 9,000. This also opens the possibility of an intraday reversal. Hence, traders can initiate fresh short positions with stop-loss at 8,950.

Strategy: Sell the contract with stop-loss at 8,950

Supports: 8,700 and 8,650

Resistances: 8,920 and 9,000

Published on April 08, 2020

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