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Nifty 50 April Futures (14,380)
As major Asian equity indices have been trading positive today, the benchmark indices in India opened with a gap-up. However, after rallying during the first hour of trade, both Nifty 50 and Sensex started to give up the gains and are now trading higher by only 0.15 and 0.2 per cent, respectively. At their intraday peak, both the indices were up by about 1 per cent each.
Since there was a huge sell-off yesterday and the market is struggling to recover toda, the bears seem to be possessing good strength. Although the breadth of the Nifty 50 index remains positive as 36 out of the 50 stocks in the index are in the green. Also, there is a drop in volatility which is a good sign. India VIX – the volatility index – has tumbled by nearly 8 per cent to 21.22.
Like the benchmarks, the mid- and small-cap indices too are up today, posting gains in the range of 0.5 and 0.7 per cent. Among the sectoral indices, except the Nifty IT (down by 3.8 per cent) and the Nifty pharma index (down by 0.6 per cent), all other indices are up today so far. The Nifty auto index is the top performer, up by 2 per cent followed by the Nifty financial services index, up by 1.8 per cent.
Futures: Following the gap-up open of the underlying Nifty 50 index, the futures contract began the session higher at 14,388 versus previous close of 14,343. It then rallied to register an intraday high of 14,473 before losing some of its gain. The contract is now trading around 14,380. While it is up for the day so far, the rally has been facing some pressure as it could not sustain above the critical level of 14,400. On the downside though 14,330 has been providing good support.
Considering the prevailing price action, bulls can regain control only if the contract moves back again 14,400. So, one can stay on the sideline for now and initiate fresh longs if the contract rallies past 14,400 and maintain a stop-loss at 14,360. If price goes above 14,400 again today, it will most likely retest the day’s high at 14,473 and could even touch 14,525.
Strategy: Go long with stop-loss at 14,360 if the contract breaks out of 14,400
Supports: 14,330 and 14,290
Resistances: 14,470 and 14,525
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