Backed by positive Asian markets, the Indian benchmarks — Nifty 50 and Sensex — opened the session with a gap-up. Nifty at 16,900 and Sensex at 56,565 are up by about 1.4 per cent each. Among the Asian majors, Hang Seng is the biggest gainer, up by a little over 7 per cent. ASX 200, Nikkei 225 and KOSPI are up between 1.1 and 1.8 per cent.
Substantiating the bullish bias, the market breadth of the Nifty 50 i.e., the advance/decline ratio stands at 46/4. Like the benchmarks, all mid- and small cap indices are up, each surging over 1 per cent. All sectoral indices have gained – the Nifty Metal and Consumer durables are the top performing indices, up by 2.3 and 2 per cent, respectively. Moreover, there is a drop in volatility as indicated by India VIX, which is down by 6.4 per cent to 25. These factors denote that the buying so far has been broad-based, which is good for the bulls.
Futures: The March futures of the Nifty 50 index opened with a gap-up, like the underlying, at 16,870 versus yesterday’s close of 16,669. It then rallied and marked a fresh high of 16,964 and is currently trading around 16,900. Therefore, the contract stays within the broad resistance band of 16,800–17,000. Although it slumped to mark a low of 16,556 on Tuesday, the contract has opened on the strong foot today and has come back in to the 16,800 – 17,000 band.
Nevertheless, the price action since morning shows that for intraday positions, 16,860 and 16,960 are the key levels. So, one can wait for the breach of these levels before punching fresh orders.
We recommend the following course of action for today. Go long if contract rallies above 16,960 with stop-loss at 16,840; exit the position if price hits 17,200. But if it slips below 16,860, initiate short with stop-loss at 16,980; liquidate the shorts when price falls to 16,600.
Strategy: Go long if contract rallies above 16,960 with stop-loss at 16,840; exit the position if price hits 17,200. But if it slips below 16,860, initiate short with stop-loss at 16,980; liquidate the shorts when price falls to 16,600.
Supports: 16,860 and 16,600
Resistances: 16,960 and 17,200