Technical Analysis

The Nifty Call: Buy on declines with stop-loss at 10,290

Yoganand D | Updated on October 11, 2018 Published on October 11, 2018

Nifty 50 October Futures (10,334)

Taking cues from global markets, the Sensex and the Nifty began the session on a weak note. On Wednesday, the Dow Jones Industrial Average nose-dived 830 points or 3.15 per cent to close at 25,598 and Nasdaq Composite Index plummeted 315 points or 4 per cent to close at 7,422. The Nikkei 225 index has tumbled 915 points or 3.8 per cent to 22,590 levels and Hang Seng index has also tumbled 969 points or 3.7 per cent to 25,228 levels.

Following a large gap-down opening, both the Sensex and the Nifty found support at the intra-day low and are currently in a recovery mode. The buying interest at lower levels and short-covering is helping the markets to recover. Volatility index India VIX, which surged to an intra-day high of 20.85, has fallen to 19.55 levels, though it is up 9 per cent so far today.

The Nifty October month futures contract started the session with a large gap-down opening at 10,208. Nevertheless, the contract began to recover taking support from its intra-day low at 10,155. While trending up, the contract has conclusively breached key resistances at 10,200 and 10,300 levels. It has marked an intra-day high at 10,370. Traders with a near-term view can buy on declines with a stop-loss at 10,290 levels. Key supports are at 10,330 and 10,300. A decisive fall below 10,300 can drag the contract down to 10,270 and 10,250 levels. On the upside, a strong rally above the immediate resistance at 10,370 can take the contract northwards to 10,400 and 10,430 levels. Next key resistances are at 10,450 and 10,475.

Strategy:  Make use of intra-day dips to initiate fresh long position with a fixed stop-loss 10,290 levels.

Supports: 10,300 and 10,270

Resistances: 10,370 and 10,400

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