Nifty 50 (19,315) and Sensex (64,970) are trading flat after the initial hour of trade, following mixed cues from the Asian market. Among the major equity indices, the Nikkei 225 (31,640) and KOSPI (2,515) are up 0.5 per cent each, whereas the ASX 200 (7,140) and the Hang Seng (17,700) have lost 0.2 and 1.2 per cent, respectively.
That said, in the domestic market, there are some bullish signs. For instance, the advances/ declines ratio of the Nifty 50 stands at 30/20, and all mid- and small-cap indices are in the green.
Besides, only a few sectors are in the red, but the majority have gained so far today. Nifty Metal, up by 0.5 per cent, is the top gainer, whereas Nifty Oil & Gas, down by 0.6 per cent, is the top loser.
Broadly, although the trend has been bearish recently, the price action hints that Nifty 50 is now attempting to form a base against which it could begin an uptrend. However, there is no confirmation for the same.
Nifty 50 futures
The August futures contract of the Nifty 50 opened today’s session almost flat at 19,326 versus Friday’s close of 19,332. It is currently hovering around 19,315, down by 0.1 per cent.
While the trend has been bearish, there is support at 19,275. If this level is breached, we are likely to see another leg of downtrend, potentially to 19,075, a support. Subsequent support is at 19,000.
On the other hand, if there is a rebound from the current level of 19,315, it will face a resistance at 19,400. A breakout of this level is needed for the bulls to gain traction. Above 19,400, the nearest resistance levels are at 19,500 and 19,600.
Trading strategy
The next leg of trend depends on the breach of the 19,275-19,400 range. Traders can initiate fresh positions along the direction of the break of this price band. Until then, we suggest staying out.
Supports: 19,275 and 19,075
Resistance: 19,400 and 19,500