Technical Analysis

Nifty call: Buy on dips with stop-loss at 10,390 levels

Yoganand D. | Updated on October 12, 2018 Published on October 12, 2018

Nifty 50 October Futures (10,460)

Asian markets are in the green today, despite US markets extending their fall on Thursday. The Nikkei 225 has climbed 103 points or 0.46 per cent to 22,694 and the Hang Seng has surged 493 points or 1.95 per cent to 25,760 in today's session. Taking cues from the bullish Asian markets, the Sensex and the Nifty began the day with a wide gap-up opening and continue to trend up.

Buying interest is seen in the mid- and small-cap segments. The market breadth of the Nifty index is biased towards advances. The India VIX index has slumped almost 7 per cent to 19.11 levels.

The Nifty October month futures contract started the session with a wide gap-up opening at 10,329 levels, breaching a key resistance at 10,300. The contract continued to move upwards after marking an intra-day low at 10,321. Subsequently, the contract broke above the next key resistance level at 10,400.

The near-term outlook will remain bullish as long as the contract trades above 10,400 levels. Traders can make use of intra-day dips to buy the contract, while maintaining a fixed stop-loss at 10,390 levels. The contract can extend the up-move and test resistances at 10,475 and 10,500.

A decisive rally beyond 10,500 can take it higher to 10,525 and 10,550 levels. On the other hand, a conclusive fall below the immediate support level of 10,400 can bring back selling pressure. The next key supports are at 10,350 and 10,320 levels.

Strategy: Make use of intra-day dips to buy the contract with a stop-loss at 10,390 levels.

Supports: 10,400 and 10,350

Resistances: 10,475 and 10,500

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