Technical Analysis

Nifty call: Wait for confirmation before pulling the trigger

Akhil Nallamuthu | Updated on February 19, 2021 Published on February 19, 2021

BL Research Bureau

Nifty 50 February Futures (15,065)

Taking bearish cues from the Asian market, the India benchmark indices opened today’s session on the weak foot. The Nifty 50 and the Sensex are now down by 0.2 per cent each. Among the major indices in Asia, the Nikkei 225 has lost 0.7 per cent whereas the Hang Seng is down by 0.2 per cent. Shanghai composite remains an exception by gaining 0.5 per cent.

Apparently, the market breadth of Nifty 50 index is marginally bearish as the advance-decline ratio stands at 23-27. Yet, the volatility has not changed much as India VIX, the volatility index, has inched up by 0.3 per cent to 21.6.

The mid- and small-cap indices are on a mixed bag today as some have gained and some are trading in the red so far today. Among the sectoral indices, barring the Nifty media (up by 0.3 per cent) and the Nifty FMCG index (up by 0.2 per cent), all others are either flat or down. The Nifty auto is the worst performer for the day so far as it lost about 1.5 per cent followed by the Nifty financial services index, down by 0.9 per cent. Thus, as it stands, the bias seems to be bearish for the day.

Futures: The February futures contract of the Nifty 50 index began the session lower at 15,062 and extended the decline to mark an intraday low of 15,018. But then, the contract recovered and hit an intraday high of 15,145. However, the rally could not sustain, and the contract gave up some of its gain. Consequently, it is now trading with a quarter per cent loss and is hovering at the support of 15,070. For the past couple of hours, the contract has been fluctuating between 15,050 and 15,100 and until either of these levels are breached, the next leg of trend can remain uncertain.

Given the circumstances, one can wait before pulling the trigger. For intraday, traders can open new position along the direction of the break of the range of 15,050 and 15,100. A break below the support at 15,050 can result in the futures touching the crucial support of 15,000. A breach of 15,000 can result in intensified sell-off. Subsequent supports can be spotted at 14,960 and 14,900. On the other hand, if the contract breaks out of the resistance at 15,100, it can rise to 15,160, a break of which can lift it towards 15,200.

Strategy: Wait for confirmation before pulling the trigger

Supports: 15,050 and 15,000

Resistances: 15,100 and 15,160

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Published on February 19, 2021
technical analysis
futures and options
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