Nifty 50 July Futures (9,887) Following a positive open at 9,900, the Nifty July futures contract started declining and marked an intra-day low of 9,878.9. But, the contract subsequently rallied and recorded an intra-day high of 9,919.7, witnessing buying interest. This rally failed to sustain and the contract once again began to decline.
It has been a volatile session. The underlying Nifty index is trading at a marginal premium to the contract. The market breadth is almost evenly poised, without signalling any direction.
As the contract witnesses selling pressure at higher levels and trades at a discount to the underlying, it could face difficulty in moving higher. The near-term outlook will be bearish as long as the contract trades above 9,900 levels.
Traders with a near-term view can go short with a stop-loss at 9,910. The contract can decline and test support at 9,878 and in the 9,850-9,860 band. A further decline below 9,850 can find support at 9,830. On the other hand, to alter the bearish stance, the contract needs to emphatically rally beyond 9,920 levels. The next resistances are at 9,940 and 9,950 levels.
Strategy: Go short on rallies with a fixed stop-loss at 9,910 levels.
Supports: 9,878 and 9,860
Resistances: 9,900 and 9,920