Technical Analysis

The Nifty call: Go long with stop-loss at 15,650

Akhil Nallamuthu BL Research Bureau | Updated on July 02, 2021

A man walks past the Bombay Stock Exchange (BSE) building in Mumbai (file photo)   -  REUTERS

The equity markets across Asia are giving mixed signals

The Indian benchmark indices – the Nifty 50 and the Sensex – opened with a gap-up; however, both the indices gave up the gains and are currently around yesterday’s closing level. The equity markets across Asia are giving mixed signals – the Nikkei 225 have gained nearly 0.3 per cent whereas the Hang Seng is now down by a little over 2 per cent.

Although the Nifty 50 is flat for the day, the market breadth is indicating a negative bias as the advance-decline ratio stands at 20-30. Nevertheless, the volatility seems to have dropped as indicated by India VIX – the volatility index, which is down by 2 per cent so far to 12.59. Even as the benchmark indices are sluggish, the mid- and small-cap indices are in the red and they have gained between 0.2 and 1.1 per cent.

Also read: The Nifty call: Nifty 50 July Futures (15,715)

Among the sectoral indices, the Nifty Realty in the best performer today until now by gaining 0.9 per cent. This is followed by the Nifty Media index, up by 0.7 per cent. Among the laggards, the Nifty IT sits first as it lost nearly 0.7 per cent followed by the Nifty Metal index, down by 0.6 per cent.

Futures: Following the underlying Nifty 50 index, the futures contract (July expiry) opened marginally higher at 15,743 compared to yesterday’s close of 15,710. However, it soon started to move downhill after registering a high of 15,754 and made a low of 15,659. It then recovered and is now trading around 15,700 – a potential trend defining level for the day. That is, the trend can remain bearish until the contract remains below this level whereas the contract can rally considerably if this hurdle is decisively breached. But notably, the daily chart shows that the price band between 15,660 and 15,700 is a strong support band.

Hence, traders can initiate fresh long positions on the back of this support band with stop-loss at 15,650. Above 15,700, the contract will most likely rally to 15,760 above which it can touch 15,800. On the other hand, if there is a fall below 15,660, it can touch 15,600.

  • Strategy: Initiate fresh longs with stop-loss at 15,650
  • Supports: 15,660 and 15,600
  • Resistances: 15,760 and 15,800
Published on July 02, 2021

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