Technical Analysis

Nifty call: Short at 17,440 and 17,500 with stop-loss at 17,575

Akhil Nallamuthu BL Research Bureau | Updated on November 23, 2021

Nifty 50 November Futures (17,390)

Following the sharp sell-off yesterday, the domestic equity market opened on a weak foot today. In Asia, the equity markets have been a mixed bag. ASX 200 gained by nearly 0.8 per cent, Hang Seng is down by 1.2 per cent and KOSPI is down by about 0.6 per cent.

While the Indian benchmarks opened with a gap down, the Nifty 50 and the Sensex recovered from the day’s low and are currently down by 0.15 and 0.35 per cent, respectively. Nifty is at 17,390 and Sensex is at 58,255.

The market breadth of the Nifty 50 index is showing bullish bias as the advance-decline ratio is at 33-17. Even as the benchmarks are slightly down, the mid- and small-cap indices have gained between 0.4 and 1.2 per cent. Among the sectoral indices, the Nifty Metal is the top gainer, up by 2.9 per cent followed by the Nifty Realty, up by 1.8 per cent. On the other hand, the Nifty Private bank index is the worst performer by losing nearly 0.5 per cent followed by the Nifty Bank index, down by 0.3 per cent.

Futures: Like the underlying Nifty 50, the November futures of the index opened lower at 17,325 as against yesterday’s close of 17,435. It then fell to mark an intraday low of 17,250. However, it recovered from that level and is now hovering around 17,390. From the current levels, the contract faces resistance at 17,440 and 17,500. Since the trend has been bearish recently, the likelihood of the contract moving above 17,500 is low.

Hence, traders can short the contract at 17,440 and 17,500. Place initial stop-loss at 17,575. On the downside, the contract is likely to retest 17,250 where one can exit half of the shorts. Liquidate the remaining at 17,150. When price falls below 17,300, revise the stop-loss to 17,450 and further revise it down to 17,350 if the contract slips below 17,250.

On the other hand, if the contract falls below 17,350 without rallying to 17,440 and 17,500, one can initiate fresh short positions below 17,350 with a stop-loss at 17,450. Liquidate half of the shorts at 17,250 and the remaining at 17,150.

Strategy: Short at 17,440 and 17,500 with stop-loss at 17,575. Alternatively short if the contract falls below 17,350 without a corrective rally; stop-loss at 17,450.

Supports: 17,250 and 17,150

Resistances: 17,440 and 17,500

Published on November 23, 2021

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