Nifty 50 September Futures (17,985)

The equity indices across Asia have opened the week on the front foot. Following the global cues, the Indian benchmark indices opned gap-up and rallied further. The Nifty 50 at 17,950 and the Sensex at 60,210 are up by 0.7 per cent each.

The market breadth of the Nifty 50 index is positive as the advance/decline ratio is at 40/10. All the mid- and small-cap indices are trading higher ranging 0.7–1.2 per cent. Moreover, all the sectoral indices too have gained. The Nifty Media and the Nifty IT are the top gainers, up by 2.2 and 1.6 per cent, respectively.

Therefore, the buying seems to be broad-based and rally in the benchmark indices can extend more in today’s session.

Futures: The September futures of the Nifty 50 index opened with a gap-up at 17,900 versus last week’s close of 17,866. It further rallied to mark a high of 17,997, and currently moderated a bit to trade at 17,985.

Although 18,000 can be a resistance, given the current momentum, the likelihood of the Nifty futures rallying past this level appears high. Above 18,000, the possible resistances are at 18,100, 18,200 and 18,350. But note that there is a slight chance for the contract to soften to 17,940 before breaking out of 18,000. Considering these, here are our trade recommendation.

Strategy: Buy Nifty futures at the current level of 17,985 and add more longs when the contract dips to 17,940. Place stop-loss at 17,885. When the contract touches 18,100, liquate one-third of the longs and tighten the stop-loss to 18,000. Exit the remaining longs at 18,200.

Supports: 17,940 and 17,900

Resistances: 18,000 and 18,100

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