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BL Research Bureau
Nifty 50 September Futures (16,700)
Although the major Asian indices have been exhibiting a bearish bias, the domestic benchmark indices, after a flat beginning, has gained – the Nifty 50 is up by nearly 0.3 per cent to 16,685 and the Sensex is up by about 0.2 per cent to 56,050. Among the Asian majors, the Nikkei 225 lost nearly 0.4 per cent whereas the Hang Seng is down by 0.25 per cent so far.
The market breadth of the Nifty 50 is showing a positive bias as the advance-decline ratio now stands at 37-12. The mid- and small-cap indices too have gained between 0.5 and 0.9 per cent and the volatility, as indicated by India VIX, has come down by about 1 per cent. These are signals synonymous with an uptrend. Further, apart from the Nifty Private bank index (down by 0.1 per cent), all other sectoral indices are in the green. The Nifty Metal is the leader, up by 1.3 per cent followed by the Nifty Pharma index, up by 1.1 per cent.
Futures: The September futures contract of the Nifty 50 opened the session slightly lower at 16,639 as against yesterday’s close of 16,647. While it initially dropped to mark an intraday low of 16,574, the contract swiftly recovered and started to move up. After registering an intraday high at 16,710, it is currently hovering around the key level of 16,700. Even as there are several factors like market breadth, broad-based buying and the intraday recovery substantiate the bullish view, one should closely monitor how the contract reacts to the important level of 16,700.
Go long with stop-loss at 16,675 if the futures decisively breach 16,700. A breakout of this level means the contract could retest the prior high of 16,745. Above this level, it could touch 16,800. But if the contract falls from the current levels, the nearest supports can be seen at 16,680 and 16,660. Subsequent support is at 16,600.
Strategy: Go long above 16,700; stop-loss at 16,675
Supports: 16,680 and 16,660
Resistances: 16,745 and 16,800
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