The strong sell-off in the US equities overnight and the Asians in the morning have triggered a wide gap-down open in the Indian benchmark indices.
Sensex and Nifty 50 are trading sharply lower by 1.8 per cent each. Sensex is at 53,242 and Nifty is trading at 15,953.
Both Sensex and Nifty have failed to breach their crucial levels of 55,000 and 16,400 respectively yesterday and have come-off sharply today. This keeps the broader bearish view intact.
Resistance will now be in the 53,600-53,800 region for the Sensex and 16,000-16,050 for Nifty. The upside can be capped at these resistances.
All major Asian indices are trading in red. Shanghai Composite (3,083) is marginally down by 0.08 per cent. Nikkei 225 (26,412), Kospi (2,594) and Hang Seng (20,179) are down in the range of 1.2-2.25 per cent.
In the US, the Dow Jones Industrial Average (31,490) had tumbled 3.6 per cent yesterday. It can fall further towards 31,000-30,500 in the next few days.
The Nifty 50 May (15,910) Futures has opened with a wide gap-down below 16,000 and is down 1.95 per cent. Resistance will now be at 16000. The view is bearish. A fall to 15,750-15,700 can be seen now.
A further break below 15,700 will increase the downside pressure and drag the contract down to 15,500 and even lower in the coming days.
Traders can go short now.
Accumulate shorts at 15,970 if a bounce is seen during the day. Keep the stop-loss at 16,040. Trail the stop-loss down to 15,880 as soon as the contract fall to 15,840. Move the stop-loss further down to 15,790 as soon as the contract touches 15,960 on the downside. Book profits at 15,720.
A strong and a sustained rise past 16,000 will be needed to ease the downside pressure and open doors to test 16,100-16,200 again.
Go short now and at 15,970. Keep the stop-loss at 16,040 for the target of 15,720. Trail the stop-loss down to 15,880 as soon as the contract fall to 15,840. Move the stop-loss further down to 15,790 as soon as the contract touches 15,960 on the downside
Supports: 15,750 and 15,700
Resistances: 16,000 and 16,100