Technical Analysis

Nifty Call: Tread with caution as markets are range-bound

Yoganand D | Updated on July 27, 2020 Published on July 27, 2020

Nifty 50 July Futures (11,110)

Taking bearish cues from the Asian markets, the domestic equity benchmark indices - the Sensex and the Nifty 50 commenced the session on a flat note and subsequently slipped into negative territory. The Nikkei 225 is down by 0.16 per cent to 22,715, and Hang Seng index has slipped 0.34 per cent to 24,622 levels. After an initial decline, the domestic benchmark indices are on a recovery mode and have fallen 0.2 per cent and 0.23 per cent respectively. But the market breadth of the Nifty 50 index is biased towards declines. The India VIX - the volatility index has surged 2.1 per cent to 25 levels. While the Nifty mid-cap index has slumped 0.8 per cent, the Nifty small-cap index is hovering flat with an upward bias. Among the sectoral indices, the Nifty IT index and Nifty Metal index are trading in the positive territory, gaining 1.9 per cent and 0.4 per cent respectively. Top sectoral losers are the Nifty Bank and Nifty PVT Bank index which has tumbled 2.6 per cent each.

Following a gap-up open at 11,201 the Nifty 50 index futures of July month recorded an intra-day high at 11,225. However, the contract started to decline on the back of selling interest and profit booking at higher levels. The contract marked an intra-day low at 11,070 and recovered most of the intra-day loss from the low. The contract faces key resistance at 11,160. A strong rally above this level can bring back bullish momentum. Traders can wait and initiate fresh long positions above 11,160 with a fixed stop-loss. In that case, it can trend upwards to 11,180 and then to 11,200. A sharp break above 11,200 can push the contract northwards to 11,225 and 11,250. On the other hand, a slump below the next support level of 11,100 can pull the contract down to 11,080 and then to 11,050. Go short on a fall below 11,100 with a fixed stop-loss.

Strategy: The index futures is range-bound between 11,100 and 11,160. Tread with caution

Supports: 11,100 and 11,080

Resistances: 11,160 and 11,180

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Published on July 27, 2020
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