BL Research Bureau
The Nifty 50 and the Sensex opened today’s session with a gap-down and declined. While Nifty at 17,475 is down by 0.25 per cent, Sensex at 58,645 is down by nearly 0.35 per cent. This is on the back of the Asian markets being bearish. ASX 200, Nikkei 225, Hang Seng and KOSPI have lost 0.4, 0.7, 0.7 and 0.6 per cent, respectively.
The market breadth of the Nifty 50 is showing a bearish bias i.e., the advance-decline ratio is at 21-29. On the contrary, the mid- and small-cap indices are in the green, up between 0.2 and 0.9 per cent. The Nifty Metal is the top gainer, up by about 0.8 per cent and the Nifty Consumer durables is the worst performer so far, down by 0.7 per cent.
Futures: Similar to the underlying Nifty 50, the December futures of the index opened lower at 17,532 versus yesterday’s close of 17,561. While it made an intraday high of 17,569, the contract declined and is now trading around the key level of 17,500. Yesterday, the contract fell after facing the resistance 17,585. Now it is also below the support of 17,520.
The price action hints at further weakness and the likelihood of the contract dropping below 17,500 is high. A decline below 17,500 can drag it to 17,400. Below this, it can touch 17,350. On the upside, from the current level, the contract is likely to face barrier at 17,520 and 17,585.
Considering the above factors, traders can initiate fresh short at current levels and short again if it rallies to 17,585. Keep initial stop-loss at 17,625. When the contract depreciates to 17,400, liquidate 50 per cent of the positions that you hold and revise the stop-loss to 17,460. Exit the remaining at 17,350.
Strategy : Open fresh short at current levels and short again if futures moves up to 17,585. Keep initial stop-loss at 17,625. When the contract depreciates to 17,400, liquidate 50 per cent of the positions that you hold and revise the stop-loss to 17,460. Exit the remaining at 17,350.
Supports : 17,400 and 17,350
Resistances : 17,520 and 17,585