Domestic benchmarks Nifty 50 (18,530) and Sensex (62,280) look positive as they gained nearly one-fourth of a per cent each in early trade on Tuesday.
Similarly, most of the Asian indices are up. Nikkei 225 (27,960), ASX 200 (7,200), and Hang Seng are up in the range of 0.3 – 0.7 per cent.
The market breadth of the Nifty 50 is showing a positive bias as the advance/decline ratio stands at 28/22. Like the benchmarks, the mid- and small-cap indices are also trading in green. Among the sectors, the Nifty Pharma is the top gainer, up by 1.4 per cent, while Nifty Realty is the top loser, down by 0.5 per cent.
Nifty 50 futures
The December futures of the Nifty 50 index opened today’s session higher at 18,630 versus yesterday’s close of 18,605. It is currently trading at around 18,625.
The contract has a resistance at 18,650. Above this, there is a falling trendline resistance which might come in at around 18,700. Note that the trend has been bearish since the beginning of December. So, even if the contract moves up from here, it might invite fresh sellers between 18,650 and 18,700 resulting in a resumption of the short-term downtrend.
On the downside, support from the current levels can be seen at 18,525 and 18,450.
If the Nifty futures decisively breaks out of 18,700, it can rally to 18,840 and then possibly to 18,900.
Trading strategy
Initiating trade at the current levels does not give us a good risk-reward ratio. Therefore, we suggest to stay out for now. If the contract rises to 18,650, go short. Add more shorts if price goes up to 18,700 and then place stop-loss at 18,750.
When price slips below 18,575, move the stop-loss down to 18,650. Book profits at 18,525.
Supports: 18,525 and 18,450
Resistance: 18,650 and 18,700