Technical Analysis

Nifty call: Short if contract slips below 10,150 with stop-loss at 10,220

Akhil Nallamuthu | Updated on June 29, 2020

BL Research Bureau

Nifty 50 July Futures (10,165)

Taking the contrary hint from the Asian market, the Indian benchmarks opened the session with a gap-down. Post the opening session, both the indices fell, and now the Nifty 50 spot and the Sensex spot are trading lower by 1.5 per cent and 1.2 per cent, respectively.

Among the major Asian indices, the Nikkei 225 has lost 2.3 per cent so far whereas the Hang Seng and the Shanghai composite indices have dropped 1.5 per cent and 0.8 per cent, respectively.

As 45 out of the 50 stocks in the Nifty 50 index are trading lower, the market breadth currently indicates bearish bias for the day. The mid- and small-cap indices too are in the red like the benchmarks, meaning a broad-based selling.

While the Nifty FMCG index has gained about 0.8 per cent today, all other indices are heading southwards. Down by 4.2 per cent, the Nifty media index is the top loser followed by the Nifty metal and the Nifty realty index, down by 3.7 per cent and 3.4 per cent, respectively. Since the sentiment is weak, the volatility has shot up today. India VIX – the volatility index shows an increase of nearly 5 per cent to 30.1 levels.

The July futures contract of the Nifty 50 index, which has been facing downward pressure since last Wednesday, has begun the week with a considerable gap-down, i.e. the contract opened at 10,241 against last Friday’s close of 10,318. Since the beginning of the session, it has been falling and is now trading near important support of 10,150. A break below this level can intensify the sell-off. Considering these factors, traders can initiate fresh short positions with stop-loss at 10,220 if the contract breaks below 10,150. Below this level, it might fall to 10,100 and 10,050.

Strategy: Short if contract slips below 10,150; stop-loss at 10,220

Supports: 10,100 and 10,050

Resistances: 10,220 and 10,250

Published on June 29, 2020

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