Technical Analysis

Nifty call: Sell on rallies with fixed stop-loss at 11,375 levels

| Updated on July 22, 2019 Published on July 22, 2019

Nifty 50 July futures (11,336)

Extending last week's decline, the Sensex and Nifty commenced the session in negative territory, with a gap-down open. Both the key indices continue to trade in negative territory.

The Asian markets are also down; the Nikkei 225 has fallen 0.23 per cent to 21,416 and the Hang Seng Index has tumbled 1.2 per cent to 28,430 levels.

The India VIX has jumped 5 per cent to 13.14 levels. The Nifty mid- and small-cap indices have slumped 1 per cent and 1.8 per cent respectively. Selling pressure in the Nifty Bank and Nifty Financial Services is dragging the entire market.

On the other hand, the market breadth of the Nifty index is biased towards advances. Buying interest is seen in the Nifty Pharma and Metal indices. These indicate the possibility of a recovery. However, traders should tread with caution.

The Nifty July futures contract began the session with a gap-down open at 11,407 and extended the down-move, breaching the key support at 11,425 levels. The near-term outlook remains bearish as long as the contract trades below 11,400 levels. After taking support at the intra-day low of 11,317, the contract is in a recovery mode.

A strong rally above 11,375 can lead to a corrective rally to 11,400 and 11,425 levels. Key support is at 11,300. A strong fall below this base can drag the contract down to 11,280 and 11,250 levels.

Strategy: Sell on rallies while maintaining a fixed stop-loss at 11,375 levels

Supports: 11,300 and 11,280

Resistances: 11,375 and 11,400

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