Technical Analysis

Nifty call: Stay on sidelines for a decisive breakout

Akhil Nallamuthu | Updated on October 24, 2019

BL Research Bureau

Nifty 50 October Futures (11,616)

Despite positive cues from the Asian markets--the US market too closed on a positive note--the trend in the price action of Nifty looks weak. Failing to make new highs, the index declined yesterday, and the weakness seems to be have spilled over to today’s session as well. Like Nifty, the Sensex too is marginally down today.

The lack of bullish strength is also witnessed in the advance – decline ratio of the Nifty 50 index in which 30 out of 50 stocks are trading lower today. There is not much volatility though, as indicated by the volatility index, India VIX. It is currently at 16.5, down by 0.4 per cent as against yesterday’s close. Most of the sectoral indices are in the red, led by Nifty pharma index which has lost one percentage point. Nifty media index is the top gainer, up by 0.8 per cent today.

The October futures contract could not break above the crucial resistance of 11,700 and has been on a decline since yesterday. It is currently hovering around the level of 11,600 which seems to offer a good support. On closer observation, one can find that the futures have formed a range between 11,575 and 11,700 and unless the contract breaches either of these levels, next leg of trend cannot be confirmed. Hence, it is recommended to remain on the sidelines until there is a decisive breakout.

Strategy: Stay on sidelines and wait for a decisive breakout.

Supports: 11,600 and 11,575

Resistances: 11,630 and 11,700

Published on October 24, 2019

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