The Nifty 50 (19,400) and Sensex (65,450) have opened flat in today’s session despite considerable bearish cues from the Asian market. The Indian benchmarks’ peers in Asia, including the Nikkei 225 (32,730), ASX 200 (7,150), Hang Seng (18,450) and KOSPI (2,550) are down between 1 and 3.4 per cent.
Nevertheless, there is a bullish bias in the domestic market, even as the indices are flat. For instance, the advances/ declines ratio of the Nifty 50 stands at 28/22, and all the mid- and small-cap indices are in the green.
Among the sectors, Nifty Realty, up by nearly 2 per cent, is the top gainer. At the other end of the spectrum, Nifty Metal, down by 0.4 per cent, is the top loser.
Broadly, although there are positive factors with respect to the local market, equity market sentiment across Asia seems to be weak. Thus, these forces could cancel each other out, potentially leading to a flat trend for intra-day.
Nifty 50 futures
The July futures contract of the Nifty 50 opened today’s session slightly lower at 19,441 versus yesterday’s close of 19,467. It is currently hovering around 19,460.
The price action over the past couple of days shows that Nifty futures is flat now, oscillating between 19,380 and 19,480. So, we will be able to predict the next leg of trend only if the contract moves out of this range.
A break-out of 19,480 can result in a rally to 19,600, whereas a breach of the support at 19,380 can trigger a fall to 19,300, which could extend to 19,250.
Trading strategy
From a trading perspective, this is not the right time to initiate fresh trades. One can consider initiating positions along the direction of the break, in the 19,380-19,480 range. Until then, stay on the side-lines. Below are our suggestions:
Go long with a stop-loss at 19,420, if Nifty futures break out of 19,480. Book profits at 19,600.
But if the contract falls below 19,380, sell with a stop-loss at 19,425. Exit at 19,250.
Supports: 19,380 and 19,300
Resistance: 19,480 and 19,600