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It was not a very good opening for the Indian equity markets after two days of festival holidays. The Nifty futures contract opened the day with a huge gap-down at 7,765.90 from its previous close of 7,825.05 and is trading volatile. The contract fell to a low of 7,742.55 and has bounced back from there.
The outlook is however bearish with strong resistance in the 7,790-7,800 zone. A fall to 7,720 and 7,700 looks likely today as long as the contract trades below this resistance zone. Further break below 7,700, if seen today, could trigger further sell-off and drag the contract lower to 7,685 or even lower.
Traders with a short-term perspective can go short. Stop-loss can be kept at 7,805 for the target of 7,725.
Only a strong break above the resistance at 7,800 will ease the downside pressure and take the contract higher to 7,820 and 7,850 thereafter. But, such a strong break and a rise looks less probable.
Strategy : Go short with a stop-loss at 7,805
Supports: 7,740, 7,700
Resistances: 7,800, 7,820
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