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Taking bearish cues from the Asian markets, the Indian benchmark indices began Thursday’s session lower compared to yesterday’s close. Although they made a part recovery, both the Nifty 50 (15,780) and the Sensex (53,050) are flat for the day.
Among the major Asian indices, ASX 200, down by nearly 2 per cent, has lost the most. Others like the Nikkei 225, Hang Seng and KOSPI are down in the range of 0.25 – 1.7 per cent.
Substantiating the bearish bias, the Nifty 50’s market breadth shows that the stocks that have depreciated today outnumber the stocks that have gained – the advances/ declines ratio of the index stands at 14/36. All the mid- and small-cap indices are in the red, losing between 0.2–0.7 per cent.
Among the sectoral indices, Nifty Realty is the top loser, down by 2.1 per cent. On the other hand, Nifty Bank is the top gainer, up by 0.5 per cent.
Futures: Like the underlying Nifty 50, the June futures of the index opened today’s session lower at 15,765 compared to yesterday’s close of 15,780. While it has made an intraday low of 15,746, the contract has recovered a little to the current level of 15,770.
That said, the overall inclination is bearish and from the current levels, the Nifty futures have strong barriers at 15,800 and 15,840. Like we discussed yesterday, a rally beyond 15,840 is less likely.
We forecast the contract to begin a downtrend from here, with the nearest support seen at 15,680 and the subsequent support at 15,600. A breach of this level can drag the contract to 15,500.
Therefore, traders can go short on Nifty futures at the current level of 15,770. Add more shorts when the price rises to 15,800. Keep the initial stop-loss at 15,850.
When the contract drops below 15,680, tighten the stop-loss to 15,800. Revise it down further to 15,725 if the Nifty futures slip below 15,625. Exit the shorts at 15,500.
Strategy: Go short on Nifty futures at the current level of 15,770. Add more shorts when the price rises to 15,800. Keep the initial stop-loss at 15,850. When the contract drops below 15,680, tighten the stop-loss to 15,800. Revise it down to 15,725 if the Nifty futures slip below 15,625. Exit the shorts at 15,500.
Supports: 15,680 and 15,625
Resistances: 15,800 and 15,840
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