Nifty call: Sell on rallies with 17,865 as stop-loss

Akhil Nallamuthu BL Research Bureau | Updated on October 06, 2021

The market breadth is currently showing bearish bias

Equity markets across Asia seem to be facing downward pressure since morning. Yet the Indian equity benchmark indices opened with a gap-up. However, both the Nifty 50 and the Sensex gave up the gains and are trading flat for the day now. Nifty is at 17,825 and Sensex at 59,775. Among the major Asian indices, the Nikkei 225 is down by a little over 1 per cent and the Hang Seng has lost about 0.85 per cent.

The market breadth of the Nifty 50 is currently showing bearish bias as the advance-decline ratio stands at 19-31. Nevertheless, all mid- and small-cap indices are marginally up so far. Among the sectoral indices, the Nifty financial services index is the top gainer, up by nearly 0.8 per cent, followed by Nifty Bank, up by 0.6 per cent. On the other hand, Nifty Metal, down by 1.6 per cent, is the top loser, followed by Nifty Pharma, which is down by 0.9 per cent.

Futures: The October futures of the Nifty 50 opened at 17,838, compared to yesterday’s close of 17,829. While it rallied and marked an intraday high of 17,865, it could build rally beyond it and correct to the current level of 17,770. Breach of the support at 17,800 means the contract could trade with negative bias for the rest of the day and the intraday trend will remain bearish until the contract trades below 17,865.

So, traders can short the contract at current levels and short more on rallies with stop-loss at 17,865. On the downside, it is likely to go below the nearest support at 17,745 and touch 17,700. A breakdown from this level means futures could be dragged to 17,630. Subsequent support is at 17,600.

Strategy: Sell on rallies with 17,865 as stop-loss

Supports: 17,745 and 17,700

Resistances: 17,800 and 17,865

Published on October 06, 2021

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