Technical Analysis

Nifty call: Go short on rallies with stop-loss at 9,800

Akhil Nallamuthu BL Research Bureau | Updated on June 12, 2020 Published on June 12, 2020


Nifty 50 June Futures (9,730)

The Indian benchmark indices opened today’s session significantly lower on the back of negative cues from the Asian markets. The US market, which posted a significant loss yesterday, seem to have set the tone for today.

The Nifty spot and the Sensex spot indices, which opened substantially lower, have been recovering since the start of the session and the loss for today is now about 1.5 per cent. In Asia, the Nikkei index ended the day with a loss of 0.8 per cent, whereas the Hang Seng index is now trading lower by 1.4 per cent.

The market breadth of the Nifty 50 index indicates a clear bearish bias as 37 out of the 50 stocks are in the red currently. All mid-cap and small-cap indices are down for the day. Consequently, all the sectoral indices have been trading lower. The Nifty PVT bank index is the top loser, down by 2.5 per cent, followed by the Nifty PSU bank index, down by 2.3 per cent. These factors indicate a broad-based selling and therefore, the market seems to witness higher volatility. India VIX, the volatility index has shot up by nearly 7 per cent to 31.75 levels.

The June futures contract of Nifty index opened significantly lower at 9,599 from its previous close of 9,894. The contract then registered an intraday low of 9,581 and then began to recover sharply and rallied to the day’s high at 9,807. As the price at 9,800 is a resistance, the contract has softened to the current market price of 9,730. Since the bias is bearish and there is a resistance at 9,800, the recovery can be limited. Hence, tread with caution and short the contract on rallies with stop-loss at 9,800.

Strategy: Go short on rallies with stop-loss at 9,800

Supports: 9,700 and 9,650

Resistances: 9,800 and 9,850

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Published on June 12, 2020
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