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Nifty 50 (19,545) and Sensex (65,830) opened the week with a gap-up. Yet, it has given up some of the gain and is up 0.2 per cent each after the initial hour of trade.
This is despite the Indian benchmark’s peers facing downward pressure. Major indices like ASX 200 (7,300), Hang Seng (19,460) and KOSPI (2,585) are down between 0.3 and 0.7 per cent. Nevertheless, Nikkei 225 (32,335) is up by a marginal 0.2 per cent.
Supporting the bullish bias in the domestic market, the advance/decline ratio stands at 28/22 and all mid- and small-cap indices are in the green.
Among the sectors, most have advanced, led by Nifty Healthcare and Nifty Pharma, up by 1.1 per cent each. On the other hand, Nifty Consumer durables, down by 0.4 per cent, is the top loser.
Nifty 50 futures
The August futures contract of Nifty 50 opened today’s session with a gap-up at 19,600 versus Friday’s close of 19,576. It quickly made a high of 19,625 and is now hovering around 19,620.
Although the inclination appears bullish, the contract faces a considerable resistance at 19,640. For the contract to establish a sustainable intraday rally, Nifty futures should cross over this hurdle. Until then, the bears will have a chance to turn the trend in their favour.
Also read: Index Outlook: Nifty 50, Sensex: Resistances ahead
In case if 19,640 is breached, the contract might rally towards the resistances at 19,700 and 19,780. But if the bears regain traction, it could fall to 19,500. A breach of this level can drag the contract to 19,400.
Trading strategy
On the back of the resistance at 19,640 traders can now consider going short on Nifty futures at the current level of 19,620. Place a stop-loss at 19,660. Book profits at 19,500.
In case the contract rallies and hits the above stop-loss at 19,660, we can assume that the resistance at 19,640 is breached. This will put bulls in a commanding position, potentially leading to further rally.
So, if the above occurs, initiate fresh long positions with stop-loss at 19,580. Exit the longs at 19,780.
Supports: 19,500 and 19,400
Resistance: 19,640 and 19,700
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