Technical Analysis

Nifty Call: Sell in rallies with a fixed stop-loss

Yoganand D, BL Research Bureau | Updated on July 08, 2019 Published on July 08, 2019

Nifty 50 July Futures (11,636)

Taking bearish cues from the Asian markets, the Sensex and the Nifty began the session with a gap-down open and continued to trend downwards.

The Nikkei 225 has slumped 1 per cent to 21,534 and Hang Seng Index has tumbled 1.8 per cent to 28,249 levels in today's session. Extending the loss, the Sensex and the Nifty have declined more than 1.5 per cent.

The market breadth of the Nifty index is biased towards declines. The India VIX, volatility index has gained 2.88 per cent to 13.44 levels. Both the Nifty mid and small-cap indices have declined 2.5 per cent and 2.2 per cent respectively. Selling pressure is seen across sectoral indices and the PSU Bank index has plummeted 5.7 per cent and is the biggest loser.

The Nifty July month contract started the session with a gap-down open at 11,769 and extended the down-move. The contract breached a key support at 11,700. The near-term outlook is bearish as long as the contract trades below 11,700 levels.

Traders can make use of intra-day rallies to go short with a fixed stop-loss. A decisive fall below 11,615 can pull the contract down to 11,600. A further decline below this key base level can drag the contract lower to 11,575 and 11,550 levels.

On the upside, a strong rally above 11,700 can bring about a corrective rally to 11,725 and 11,750 levels. A decisive move above 11,800 is needed to alter the near-term downtrend.

Strategy: Sell the contract in rallies with a fixed stop-loss

Supports: 11,615 and 11,600

Resistances: 11,700 and 11.725

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