Technical Analysis

Nifty call: Stay on the sidelines for a decisive breakout

Akhil Nallamuthu | Updated on October 25, 2019

BL Research Bureau

Nifty 50 October Futures (11,590)

Equity markets across the globe seems to be sluggish. The Indian stock market is no different. Both the Nifty and the Sensex, are moving within a range, and continue to consolidate for the fourth straight day.

On checking the market breadth of the Nifty 50 index, one can see that the number of stocks that have gained and lost are almost equally split as shown by advance – decline ratio, which stands at 26 – 24. At 15.75, India VIX - the volatility index, has dropped 3 per cent today implying a lack of activity. Most of the sectoral indices also look subdued. The exceptions are the Nifty PSU bank index, up by 1 per cent and the Nifty pharma index, down by 1.2 per cent in today’s session--the top gainer and loser respectively so far today.

The October futures of the Nifty 50 index opened on a flat note at 11,616 against the previous day’s close of 11,611. It continues to oscillate within the range between 11,575 and 11,700 and the next leg of trade can be confirmed only if it breaks either of the limits of the range. Hence, traders are advocated to remain on the sidelines and initiate positions only after witnessing a decisive break of either 11,575 or 11,700.

On the upside, the contract will face resistance at 11,630 whereas a break below 11,575 can drag the index towards 11,500.

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

Supports: 11,575 and 11,500

Resistances: 11,630 and 11,700

Published on October 25, 2019

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