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Nifty 50 August Futures (16,340)
The Indian equity benchmark indices opened with a gain today and are now about 0.6 per cent higher compared to yesterday’s close. The Nifty 50 is at 16,350 and the Sensex at 54,745. The bullishness is partly due to the positive cues from Asian indices — the Nikkei gained 0.25 per cent for the day and the Hang Seng is up by 1 per cent.
The advance-decline ratio of the Nifty 50 index looks positive as it stands at 32-18. However, the mid- and small-cap indices look mixed. While the mid-cap indices are in the green, small-caps are trading in the red. Notably, there is a minor increase in volatility in the Nifty 50 index, as shown by the India VIX or volatility index. It is up by a little over 2 per cent at 12.90.
Among the sectoral indices, the Nifty IT and Nifty Bank are the top gainers, up by 0.9 and 0.7 per cent, respectively. On the other hand, Nifty Realty is the top loser, down by 0.7 per cent, followed by Nifty Media, which is down by 0.6 per cent.
Futures: Even as the underlying Nifty 50 index began today’s session with a gap-up, the August futures opened almost flat at 16,260 versus yesterday’s close of 16,263. Yet, it has been rallying since the beginning of the session and has so far gained about 0.5 per cent for the day and hovering at 16,345. The contract seems to have taken a pause as 16,350 is an important resistance. Hence, even though the price action is bullish for the day, one should wait for the clear breach of 16,350 before initiating fresh longs.
So, traders can go long if the futures decisively break out of the resistance at 16,350 and the stop-loss can be placed at 16,300. Above 16,350, the contract has the potential to touch 16,400, and a breakout of this level can even lift it towards 16,500. On the other hand, if the price moderates on the back of the hurdle at 16,350, the nearest support can be found at 16,300. Below this, it can decline to 16,250.
Strategy: Buy if the contract breaches 16,350; stop-loss at 16,300
Supports: 16,300 and 16,250
Resistances: 16,350 and 16,400
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