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Nifty 50 September Futures (17,670)
Equity market seems to be struggling of late to keep up the pace and has been on a decline for the past few days. Since today morning, major stock markets across Asian are under pressure which is reflected on the indices. The ASX 200 is down by 1.5 per cent, the Nikkei 225 is down by 2.3 per cent, Kospi lost 1.4 per cent and the Shanghai index is down by 1.2 per cent.
Influenced by this, the Nifty 50 and the Sensex opened the session with a gap-down. As it stands, the Nifty, at 17,640, is down by 0.6 per cent so far today where as the Sensex, at 59,170, has lost 0.8 per cent.
The market breadth of Nifty 50 is showing a negative inclination as the advance-decline ratio stands at 22:28. Also, the volatility has gone up indicating more fear. India VIX – the volatility index – is up by 4 per cent at 19.30.
While the Smallcap 50 is down (by 0.3 per cent) like the benchmark indices, the Midcap 50 has gained 0.6 per cent. Similarly, the sectoral indices, too, are mixed. The Nifty PSU bank index, up by 2.7 per cent, is the top gainer whereas the Nifty Private bank index, down by 1.2 per cent, is the top loser.
Futures
The September futures of the Nifty 50 opened with a gap-down in line with the underlying index. While the contract has not seen a sharp fall, it is trading with a bearish bias. However, the support at 17,600 has helped restrict the decline until now. The futures made an intraday low of 17,613 and is now hovering around 17,650.
Traders need to be cautious because the intraday sentiment is clearly negative; but the contract is trading above a support and the major trend is bullish. Moreover, the intraday price action shows that the contract is now held within 17,600 and 17,700 range and lacks direction.
Hence, traders can stay on the sidelines now and initiate trade with a tight stop-loss along the direction of the break of the range 17,600-17,700. A breach of the support at 17,600 can attract more bears and the contract can see a swift drop to the support at 17,530. The subsequent support is at 17,480.
However, if the contract manages to stage a recovery and rally past 17,700, it is likely to appreciate towards the immediate resistance at 17,780. A breakout of this level can lift it to 17,825.
Strategy
Wait before pulling the trigger as intraday trend is unclear
Supports
17,600 and 17,530
Resistances
17,700 and 17,780
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