Nifty call: Short with stop-loss at 15,850

Nifty 50 August Futures (15,800)

The Nifty 50 index opened today with a minor gap-up and has inched upwards and is hovering at 15,800. Similarly, the Sensex began with a small gap-up and is at around 52,715. This is despite the Asian equity indices trading in the red. The ASX 200 and the Nikkei 225 are down by 0.3 and 1.8 per cent, respectively and the Hang Seng has lost 2 per cent so far.

The market breadth of the Nifty 50 indicates a bullish bias as the advance-decline ratio stands at 29-21. All the mid- and small-cap indices are in the green, gaining between 0.7 and 1.4 per cent. Among the sectoral indices, the Nifty Media and Auto are the top performers, up by 2.1 and 1.4 per cent whereas the Nifty Bank is the top loser, down by 0.4 per cent followed by the Nifty Financial services index, down by 0.35 per cent.

Futures: Unlike the underlying Nifty 50 index, which opened positive for the day, the futures opened lower at 15,735 compared to Thursday’s close of 15,806. But the contract recovered during the initial hour and covered all the losses and currently it is flat for the day as the contract is trading near yesterday’s close. However, the recovery beyond this can be difficult as 15,800 is a strong hurdle and, the negative cues given by the Asian peers can weigh on the Nifty futures. Besides, the contract struggled to get past the price band of 15,800 and 15,830 as well.

Given the above conditions, short can be the better choice for intraday. Thus, traders can sell the contract with stop-loss at 15,850. From the current level of 15,800, the futures may dip to 15,760 and it could possibly extend the decline to 15,700. On the other hand, if the contract manages to crack the resistance band of 15,800 and 15,830, it can rise to 15,900.

Strategy: Short the contract with stop-loss at 15,850

Supports: 15,760 and 15,700

Resistances: 15,800 and 15,830

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