Technical Analysis

Nifty Call: Tread with caution till contract trades between 9,650 and 9,800

BL Research Bureau | Updated on March 12, 2020

Nifty 50 March Futures (9,731)

Tracking the bearish cues from the global markets, Sensex and Nifty began the session with a large-gap down open and continued to remain bearish. The Nikkei 225 has slumped 4.4 per cent to 18,559 and Hang Seng index has tumbled 3.5 per cent to 24,341 in today's session. The Dow Jones had nose-dived 5.8 per cent to 23,553 levels in the last session. The Sensex and Nifty have plummeted about 6.5 per cent each. The market breadth of Nifty index is negative, all the 50 index stock are in red. On the other hand, the India VIX has skyrocketed 17.7 per cent to record multi-year high of 37.3 levels.

After a large-gap down open at 10,039, the Nifty 50 index continued to trend downwards. It breached a key supports at 9,900 and then 9,800 levels. After registering an intra-day low at 9,648 the index bounced up and later, the key level of 9,700 began to provide base. On the upside, the index tested the vital resistance at 9,800 and failed to decisively surpass it. A strong break above this level can push the index higher to 9,850 and then to 9,900 levels which will be a corrective rally. But, a plunge below 9,700 can pull the index down to 9,650 levels again. A further decline below this base can pull the index down to 9,600.

The Nifty March month contract is trading at a discount of 35 points to Nifty spot. After a gap-down open at 9,941, the contract recorded an intra-day high at 10,034 and resumed the downtrend. Breaking below key supports at 9,900 and 9,800 the contract marked an intra-day low at 9,625 levels. Key support for the contract is in the band between 9,650 and 9,670. A slump below this level can pull the contract down to 9,625 and then to 9,600. But, the contract faces key resistance ahead at 9,750 and 9,800. A decisive rally above this level can push the contract higher to 9,840 and then to 9,885 levels. Traders should tread with caution as long as the contract trades in the wide band between 9,650 and 9,800.

Strategy: Tread with caution as long as the contract trades in the band between 9,650 and 9,800.

Supports: 9,650 and 9,625

Resistances: 9,750 and 9,800

Published on March 12, 2020

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