Nifty call: Go long if contract breaks out of 14,775

Nifty 50 March Futures (14,730)

Following positive cues from the Asian markets, the Indian benchmarks opened with a gap-up today. The Nikkei 225 and the ASX 200 index have gained 1.7 and 2.4 per cent, respectively, and the Hang Seng index is up by 1.2 per cent so far. So, following this, the Nifty 50 and the Sensex rallied initially. However, they have given up some gains and are now trading higher by 1.2 per cent each.

The market breadth of the Nifty 50 index is bullish as the advance-decline ratio stands at 45-5 and the volatility has dropped as indicated by India VIX – the volatility index – which is down by 5.6 per cent to 26.56.

Like the benchmark indices, the mid- and small-cap indices are in the green where they have gained between 1.1 and 1.4 per cent. Among the sectoral indices, barring the Nifty PSU bank index (down by 0.2 per cent), all other indices are down. The Nifty media index, down by 3.1 per cent, is the top loser followed by the Nifty auto index, down by 2.3 per cent.

Futures: The March futures contract of the Nifty 50 index began the session with a gap-up at 14,710 compared to last session’s close of 14,578. The contract then rallied to mark an intraday high of 14,839. However, the contract started to face selling pressure and began moderating. It is currently trading around 14,730 and the intraday price action so far is hinting at some sort of weakness.

So, the rally might not regain steam today and on the upside, 14,775 can act as a solid resistance. So, even though there are factors supporting the bullish view, traders are recommended to initiate fresh long positions only if the contract surpasses the hurdle at 14,775. Stop-loss can be at 14,700. Be cautious because a breach of the support at 14,700 can result in a strong downtrend.

Strategy: Go long if contract breaks out of 14,775; stop-loss at 14,700

Supports: 14,700 and 14,630

Resistances: 14,775 and 14,830