Nifty call: Initiate shorts below 15,750; stop-loss at 15,800

Nifty 50 July Futures (15,760)

Taking bearish cues from the Asian equity markets, the domestic benchmark indices – the Nifty 50 and the Sensex began the session with a considerable gap-down. Although both the indices made some recovery, bears again dragged the indices and they down by about 1 per cent each for the day, as they are at 15,755 and 52,560, respectively. Among the major Asian indices, the Nikkei 225 and the Hang Seng lost 1.3 and 2 per cent, respectively.

The market breadth of the Nifty 50 index is showing a bearish inclination as the advance-decline ratio of the index stands at 9-41. Like the benchmarks, the mid-cap indices whereas the small-cap indices are showing some resilience. i.e., Midcap 50 has lost 0.9 per cent whereas Smallcap 50 is now flat for the day. Among the sectoral indices, the Nifty Bank and the Nifty Financial services are the biggest losers, down by 2.1 per cent and 2 per cent, respectively. The Nifty Realty is the only index in the green, gaining about 0.6 per cent.

Futures: Like the underlying Nifty 50 index, the July futures began the session with a considerable gap-down at 15,770 versus previous close of 15,936 and appears substantially bearish for the day. Even though it recovered and marked an intraday 15,836, it could not sustain the gain and resumed moving downwards. Nevertheless, currently hovering at 15,760, the contract has a support at 15,750. So, despite the bearishness, traders can wait for now and short the contract if it slips below 15,750.

Below 15,750, it can decline to 15,700, below which it can drop to 15,660. On the contrary, if the contract rallies on the back of the support at 15,750, it will face strong hurdles at 15,800 and 15,835.

Strategy: Initiate shorts below 15,750; stop-loss at 15,800

Supports: 15,750 and 15,700

Resistances: 15,800 and 15,835

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