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Domestic benchmark indices seem to lack a strong follow-through buying to move higher as the BSE Sensex and NSE Nifty 50 are trading down about 0.6 per cent each in early trade on Tuesday after witnessing gains in the last three trading days.
At the time of filing this report, Sensex is at 52,847 and Nifty is at 15,741.
Inability to move up after the wide gap-up open on Monday coupled with today’s fall indicates the inherent weakness in the indices. This can keep them under pressure to fall further in the coming days.
Nifty has come down below the key level of 15,750. As long as it trades below 15,750, the bias will remain bearish to see 15,500-15,400 and lower levels in the coming sessions.
Sensex on the other hand can remain vulnerable to see 52,000 on the downside while it sustains below 53,000.
Asian indices are trading mixed. Nikkei 225 (26,947) and Kospi (2,408) are up 0.27 per cent each while the Shanghai Composite (3,377) and Hang Seng (22,039) are down 0.06 per cent and 0.86 per cent respectively.
In the US, the Dow Jones Industrial Average (31,438) was down 0.2 per cent on Monday.
Futures
At 15,745, the Nifty 50 June Futures is down 0.58 per cent. The contract has dipped below the key level of 15,770. Inability to rise past 15,770 from here will be negative. In that case a fall to 15,670-15,650 can be seen during the day. It will also keep the chances high of testing 15,550-15,500 in the coming days.
Traders with high-risk appetite can go short now. Accumulate shorts on a rise at 15,765. Keep the stop-loss at 15,810. Trail the stop-loss down to 15,710 as soon as the contract falls to 15,680. Move the stop-loss further down to 15,690 as soon as the contract touches 15,670 on the downside. Book profits at 15,650.
The bearish outlook will get negated if the contract breaks above 15,770 decisively from here. Such a break will then pave way for a test of 15,830-15,850 levels.
Trading strategy
Go short now and at 15,765. Keep the stop-loss at 15,810 for the target of 15,650. Trail the stop-loss down to 15,710 as soon as the contract falls to 15,680. Move the stop-loss further down to 15,690 as soon as the contract touches 15,670
Supports: 15,650 and 15,550
Resistances: 15,770 and 15,850
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