The Indian benchmark indices i.e., Nifty 50 (18,175) and Sensex (61,215) have begun the week on the back foot. After opening the session with a gap-down, the indices have further depreciated and for the day, they are down by 0.7 per cent each so far.
Asian markets, too, are trading weak While Nikkei 225 (27,9100) is flat, other major indices like ASX 200 (7,143), Hang Seng (17,630) and KOSPI (2,415) have lost 0.15, 2.1 and 1.2 per cent respectively.
Looking at the Nifty 50’s market breadth, it is apparent that the overall bias for the day is negative as the advance/decline ratio stands at 10/40. Besides, all the mid- and small-cap indices, like the benchmarks, are trading in the red.
Among the sectors, barring the Nifty PSU Bank index (up by 0.2 per cent), all others are trading down. The Nifty IT and Pharma are the top losers, down by 1.3 and 0.7 per cent, respectively.
Nifty 50 futures
The November futures of the Nifty 50 index opened the day lower at 18,306 versus last week’s close of 18,356. It has further dropped to the current level of 18,190. Thus, the contract has slipped below the support at 18,200 and looks to decline further with the next support at 18,125. Subsequent support is at 18,050.
Given the price action so far and considering the overall weakness in the equity market across the continent, traders can take short positions for the day.
Trading strategy
Short Nifty futures at the current level of 18,190. Add more shorts when the price goes up to 18,250. Place stop-loss at 18,310 at first and bring it down to 18,200 when the contract falls to 18,125. Exit the shorts at 18,050.
Supports: 18,125 and 18,050
Resistance: 18,250 and 18,300