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It is flashing green across the Asian equity markets today following a positive close in the US markets overnight. The major US indices viz. the Dow and S&P 500 closed the session with a gain of 1 per cent each despite higher volatility due to the announcement of Fed policy decisions. Equity markets in Asia are up despite the Fed signalling a reduction in asset purchase programme as the news seem to be already digested by the stock markets across the region.
Early riser ASX 200 is up by nearly 1.2 per cent and the Hang Seng has gained 0.9 per cent so far for the day. Similarly, the Indian benchmark indices — the Nifty 50 and the Sensex — gained after opening with a gap-up and for the day, both up by a little over 1 per cent. The Nifty is currently at 17,740 whereas the Sensex is at around 59,590.
The market breadth of the Nifty 50 shows considerable bullishness as the advance-decline ratio now stands at 40-10. Like the benchmarks, the mid- and small-cap indices too are in the green, gaining between 0.9 and 1.5 per cent. Besides, barring the Nifty Pharma index (which is flat), all other sectoral indices are up today led by the Nifty Realty, up by 4.9 per cent. This is followed by the Nifty Bank index, up by about 1.9 per cent. These factors indicate a broad-based buying.
Futures: Tracing the underlying Nifty 50, the September futures of the index began the day higher at 17,661 versus yesterday’s close of 17,568. After opening, it continued to rally and is now trading around 17,730. The intraday trend can remain bullish until the contract remains above 17,660 and the rally is likely to extend as the buying looks durable.
Hence, traders can go long at current levels and at 17,700 with stop-loss at 17,660. The futures is likely to touch 17,800, which can be the primary target. If this level is breached, the contract can potentially rally towards 17,930 as indicated by the Fibonacci extension (plotting across the recent corrective decline). Above that, the contract can even touch 18,000 — a psychological level.
On the other hand, if the contract slips below 17,660, it could fall to 17,600 — an important support, which is less likely to be broken today.
Strategy: Go long now and on declines at 17,700 with stop-loss at 17,660.
Supports: 17,700 and 17,660
Resistances: 17,800 and 17,930
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