Nifty call: Initiate fresh short positions on rallies

Nifty 50 March Futures (15,250)

Following positive cues from the Asian market, the Indian benchmark indices opened today’s session on the front foot. However, they have not been able to extend and rally. Both the Nifty 50 and the Sensex have given up most of their gains and are now trading higher by 0.4 per cent each compared to yesterday’s closing level. Notably, both the indices opened with a gap-up of nearly 1 per cent each.

The market breadth of the Nifty 50 index is still showing bullish inclination as the advance-decline ratio is at 30-20. The volatility index has dropped by 2.4 per cent as indicated by India VIX – the volatility index – to 20.25.

The mid- and small-cap indices are in the green, similar to the benchmark indices. Among the sectoral indices, the Nifty Financial Services and the Nifty Realty are the best performers, up by 0.6 per cent each. The Nifty Auto index is the top loser, down by 0.5 per cent, followed by the Nifty Pharma index, down by 0.3 per cent.

Futures: The March futures contract began the session higher at 15,362 against yesterday’s close of 15,209 as the underlying Nifty spot index opened with a gap-up. But after marking the intraday high at 15,375, the contract started to decline. It breached the support at 15,300 and is now testing the support at 15,250. Though the contract opened with a gap-up, the intraday price action hints at weak bulls and this is being capitalised by the bears, who continue to pull down the futures. It is likely to decline further.

Hence, traders can consider initiating fresh short positions on rallies with stop-loss at 15,325. It will most likely touch the support at 15,200. A breach of this level can drag the contract to 15,160.

Strategy : Sell on rallies with stop-loss at 15,325

Supports : 15,200 and 15,160

Resistances : 15,300 and 15,340

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