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Sensex and Nifty 50 opened with a gap-down but had risen back well from the day’s low recovering all the loss. The Sensex has bounced back from the low of 58,525 and the Nifty from 17,425 and are trading in green now. Sensex is trading at 59,070 and Nifty is at 17,598.
The intermediate supports at 58,500 on Sensex and 17,400 on Nifty are holding well. However, it will have to be seen if this bounce sustains or now. Market could remain volatile ahead of the US Federal Reserve meeting outcome on Wednesday. Any sell-off after the Fed meeting in the US equities can spill over the domestic market and trigger a corrective fall going forward. As such caution is warranted at the moment instead of staying highly bullish at these levels.
The Dow Jones Industrial Average (34,584.88) is hovering above a crucial support level of 34,500. A break below this support can trigger a fresh fall to 34,000 and even lower in the coming days. Such a fall can cap the rise in the Sensex and Nifty and will keep them under pressure for a reversal.
Futures: The Nifty 50 September Futures contract has risen back from the day’s low of 17,443. It is currently trading at 17,585. Immediate resistance is at 17,620 which will have to be broken for the contract to sustain the bounce and move up further to 17,680. Inability to breach 17,620 and a subsequent fall below 17,575 can drag the contract lower to 17,500 and 17,400 again. Traders can stay on the sidelines now. Wait for a further rise and go long on a break above 17,620. Keep the stop-loss at 17,590 for the target of 17,680. Trail stop-loss to 17,635 as soon as the market moves up to 17,655.
The contract will come under pressure again if it declines below 17,575. In such a scenario, the contract can fall back to 17,500 and 17,400 again.
Strategy: Go long on a break above 17,620 with a stop-loss at 17,590. Move the stop-loss up to 17,635 as soon as the market moves up to 17,655. Take profit at 17,680.
Supports: 17,575 and 17,500
Resistances: 17,620 and 17,680
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