The Nifty Call: Make use of rallies to initiate fresh short positions

Nifty 50 June Futures (7,991)

The Nifty futures started the session with a large gap-down open, tumbling 157 points or 1.9 per cent at 8,125 as Britain has voted to leave the European Union. Brexit spooked the global financial markets. Japan's Nikkei 225 index led Asian market losses, down almost 8 per cent, Hang Seng index plunged 4 per cent and CSI 330 index fell 1.3 per cent in today's trading session. Moreover, the US and European markets index futures also nose-dived. The FTSE 100 Index futures tumbled 9 per cent, Euro Stoxx 50 plunged 11 per cent and DAX 30 plummeted almost 10 per cent. The S&P 500 Index futures tanked 5.1 per cent, the maximum move allowed.

The Nifty futures contract extended its decline breaking through key supports at 8,100 and 8,000. However, it appears to have found a temporary base by marking an intra-day low at 7,927 levels. The contract has slightly recovered from the low but, still down 3.5 per cent and trades at 7,991 levels. Traders with a short-term perspective can make use of the intra-day recovery to initiate fresh short positions while maintaining a stop-loss at 8,050 levels. Continuation of the downtrend can drag the contract down to 7,950 and then to 7,930. Next supports are at 7,900 and 7,865 levels. Key resistances are at 8,050 and 8,100 levels. Only an emphatic break-out of 8,100 will alter the current downtrend.

Strategy : Make use of rallies to initiate fresh short positions with a stop-loss at 8,050 levels.

Supports : 7950 and 7,930

Resistances : 8,050 and 8,100

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