Technical Analysis

Nifty call: Tread with caution as contract is range-bound between 11,450 and 11,520

Yoganand D | Updated on October 05, 2020 Published on October 05, 2020

Nifty 50 October futures (11,475)

Taking bullish cues from the Asian markets, the Sensex and the Nifty 50 indices started the week on a positive note, opening with a gap-up. The Nikkei 225 index has jumped 1.2 per cent to 23,312 and the Hang Seng index has surged 1.46 per cent to 23,800 levels in today's session.

After an initial gap-up open, the Sensex and the Nifty 50 have begun to move sideways in a narrow band, and have trimmed their initial gains marginally. The Sensex is up 0.76 per cent and the Nifty 50 has climbed 0.7 per cent so far. The market breadth of the Nifty 50 index is slightly biased towards advances. The India VIX has jumped 7.6 per cent to 19.7 levels, implying an increase in volatility.

Both the Nifty mid and small-cap indices are trading mixed today. Among the sectoral indices, selling interest is seen in the Nifty Auto and Media indices that have slipped 0.5 per cent and 0.8 per cent, respectively. The top gainers are the Nifty IT and the Nifty metal indices, which have climbed 2.7 per cent and 1.9 per cent, respectively.

The Nifty 50 October month contract started the session with a gap-up open at 11,460 and continued to trend upwards. The contract breached a key resistance at 11,500 and recorded an intra-day high at 11,587. But witnessing selling interest at higher levels, the contract began to decline and has slipped below 11,500 levels. Immediate support is at 11,450. Traders should tread with caution as long as the contract trades between 11,450 and 11,520. A decisive break above 11,520 can bring back the bullish momentum and take the contract northwards to 11,550 and then to 11,580 levels. On the other hand, a decisive fall below the immediate support level of 11,450, can pull the contract down to 11,425 and then to 11,400 levels.

Strategy: The contract is range-bound between 11,450 and 11,520. Tread with caution

Supports: 11,450 and 11,425

Resistances: 11,520 and 11,550

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Published on October 05, 2020
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