Nifty 50 September Futures (11,490)

Despite the Asian markets being flat, the Indian benchmark indices opened with a gap up. Both the Nifty 50 and the Sensex spot indices inched up and are now trading higher by 0.5 per cent and 0.8 per cent, respectively. Among the Asian majors, the Nikkei 225 and the Hang Seng are flat today.

The market breadth of the Nifty 50 index is neutral i.e. the advance-decline ratio is at 25-25 even as the index has gained today so far. On the other hand, the mid-cap and the small-cap indices are trading in the red between 0.4 and 1 per cent. That is, only the front-line stocks seem to be gaining; that too, not all the stocks are up. This is not a good sign from the sustainability point of view.

Among the sectoral indices, the Nifty metal index is the top gainer, up by 1 per cent, whereas the Nifty realty index is the top loser, down by 1.8 per cent. The volatility index has dropped since the benchmark indices are trading in the positive region. India VIX – the volatility index – has come down by 2.8 per cent to 22.19.

The September futures of the Nifty 50 index began the session higher at 11,449 versus yesterday’s close of 11,401. Post the open, the contract appreciated and registered an intraday high of 11,533 and then moderated to the current market level of 11,490.

On the face of it, the contract seems to be bullish, but looking at the intraday price action, it has largely been oscillating between 11,430 and 11,530 since morning.

One needs to be cautious as the market breadth is neutral, i.e. it is not indicating a bullish bias at a broader level. Considering these factors, traders can initiate fresh long positions if the contract decisively breaks out beyond 11,530. Stop-loss can be at 11,480.

Strategy: Go long if contract rallies past 11,530

Supports: 11,430 and 11,400

Resistances: 11,570 and 11,615