Nifty call: Buy now with stop-loss at 17,745

BL Research Bureau

Nifty 50 October Futures (17,820)

Against the backdrop of positive Asian markets, the Indian benchmark indices began today’s session with a significant gap-up. So far today, the Nifty 50 and the Sensex are up by nearly 1 per cent each and are currently at 17,810 and 59,750 respectively. Among the Asian majors, the Nikkei 225 is up by 0.7 per cent, Hang Seng has gained 2.2 per cent and ASX is higher by 0.7 per cent.

The domestic market seems to be witnessing a broad-based buying. That is, all mid- and small-cap indices are up and so does all the sectoral indices. The Nifty Realty and Consumer durables are the top gainers, up by 4.6 and 4.2 per cent, respectively. Also, there is a considerable drop in volatility which is indicated by India VIX – the volatility index. It has slumped 4.6 per cent today. Besides, the advance-decline ratio of the Nifty index stands at 38-12, showing a clear bullish bias.

Futures: Like the underlying Nifty 50, the October futures contract of the index opened with a gap-up at 17,772 as against yesterday’s close of 17,627. The contract rallied initially to mark an intraday high of 17,833. But, it has come-off from the day’s high and has been largely flat till now. It is oscillating between 17,800 and 17,830. So, the direction of the next price swing depends on which side it moves out of this range.

Nevertheless, there are factors like market breadth and the Asian markets’ performance so far which hints at bullishness. Therefore, traders can buy futures at current level of 17,820 and accumulate at 17,770 and place stop-loss at 17,745. The contract is expected to breakout of 17,830 and rise towards the resistance at 17,900. A breach of this level can lift it to 17,975 where profits can be booked. Once the contract crosses over 17,900, revise the stop-loss upwards to 17,830.

Strategy : Buy now and at 17,770 with stop-loss at 17,745

Supports : 17,800 and 17,745

Resistances: 17,830 and 17,900

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