Nifty 50 June Futures (15,635)

The Indian benchmark indices – Nifty 50 and Sensex – began the session with a considerable gap-down following the bearish signal from the major Asian indices. Among them, the ASX 200 and the Nikkei 225 index lost 1.8 per cent and 3.3 per cent, respectively and the Hang Seng, despite recovering in the last hour, is down by 1.1 per cent for the day so far. After opening lower, the domestic indices have recouped most of its losses and are now below 0.4 per cent each compared to Friday’s closing price.

The market breadth of the Nifty index is showing a bearish tone as the advance-decline ratio stands at 22-28. The mid- and small-cap indices are mixed and among the sectoral indices, the Nifty media and realty index are the top gainers, up by 1.6 per cent and 1.2 per cent, respectively. The Nifty auto and bank index are the laggards, down by 0.7 and 0.5 per cent, respectively.

Futures: Following the underlying Nifty 50 index, the futures contract (June expiry) opened with a gap-down at 15,548 against Friday’s close of 15,696. However, after marking an intraday low of 15,509, the contract has recovered strongly and has moved back above 15,600-mark. Currently trading around 15,640, it faces a strong hurdle and unless otherwise the contract decisively breaches this level, extension of the rally will be difficult, and the bears could regain traction. Given the prevailing conditions, traders can wait and initiate fresh longs if the contract breaks out of 15,640; stop-loss can be at 15,600.

A breach of 15,640 can lift the contract to 15,700 above which it can potentially reach 15,740. On the downside, the nearest support is 15,600 and notably, if the futures slips below this level again today, it will likely fall to 15,575 and might as well test the support at 15,530.

Strategy: Go long on the break of 15,640; stop-loss at 15,600

Resistances : 15,700 and 15,740

Supports: 15,600 and 15,575

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