The equity market seems to be under pressure since today morning as indicated by the major Asian indices. Nikkei 225 (27,350), ASX 200 (6,700), Hang Seng (18,530) and KOSPI (2,350) are down in the range of 0.8 – 1.6 per cent.
Following this, the Indian benchmark indices opened the session with a gap-down. Although the Nifty 50 (17,810) and the Sensex (59,735) recouped the losses and is flat for the day, the intraday bias can turn bearish again.
Currently, the market breadth of the Nifty 50 is not inclined to either side as the advance/decline ratio stands at 25/25. The mid and small-cap indices look mixed – the Midcap 50 is up by 0.15 per cent while the Smallcap 50 is down by 0.15 per cent. For the sectoral indices, the Nifty FMCG, up by 1.2 per cent, is the top gainer whereas the Nifty Metal, down by 0.6 per cent, is the top loser so far today.
Futures: The September futures of the Nifty 50 began the session lower at 17,776 versus yesterday’s close of 17,825. Even though it dropped to mark a low of 17,741, it has recovered to the current level of 17,800, which is a resistance.
The Nifty futures is less likely to gain above 17,800. If at all the rally extends, we expect it to be capped at 17,875. The contract will most probably fall to 17,630 from here. Below the support of 17,630, there is one more at 17,500.
Taking the above considerations, traders can initiate fresh short positions at the current level of 17,800. Add more shorts in case the contract rises to 17,875 and place initial stop-loss at 17,975.
When the contract falls below 17,700, revise the stop-loss to 17,800. Bring it further down to 17,715 when the Nifty futures fall below 17,630. Book profits at 17,520.
Strategy: Go short at the current level of 17,800 and on a rally to 17,875 with stop-loss at 17,975. When the contract falls below 17,700, revise the stop-loss to 17,800. Bring it further down to 17,715 when the Nifty futures fall below 17,630. Book profits at 17,520.
Supports: 17,630 and 17,500
Resistance: 17,800 and 17,875