Despite the major Asian indices trading in the green, the Indian indices are currently down for the day. The Nifty 50 and Sensex have lost half a per cent each so far today. The Nikkei 225, down by 0.25 per cent, is the only major index that is down, in line with the domestic indices. Others, including ASX 200, Hang Seng and KOSPI, are up in the range of 0.3–1.8 per cent.
The market breadth of the Nifty 50 index shows a bearish bias as the advances/ declines ratio stands at 15/35. All the mid and small-cap indices, too, are in the red, losing between 0.6 and 1.2 per cent. Among the sectoral indices, apart from the Nifty Media (up by 0.3 per cent), all the others are down for the day. The Nifty IT, which has depreciated by 2.2 per cent, is the top loser today.
Futures: Like the underlying Nifty 50, the July futures of the index opened today’s session flat at 16,635 versus yesterday’s close of 16,632. But it has since declined and currently trades at 16,540 i.e., nearly 0.6 per cent lower compared to Monday’s close.
Although 16,500 can be a support, the contract will most likely breach this level. In that case, it could see a swift fall, which can drag it to 16,350, a support level. Subsequent support is at 16,250.
That said, from the current level of 16,540, the Nifty futures could inch up to touch 16,580, before falling.
Therefore, traders can go short on Nifty futures at the current level of 16,540 and add more shorts when it moves up to 16,580. Place a stop-loss at 16,660. When the contract slips below 16,500, tighten the stop-loss to 16,600. Liquidate all the shorts at 16,350.
Strategy: Go short at the current level of 16,540 and add more shorts when the contract moves up to 16,580. Place a stop-loss at 16,660. When the contract slips below 16,500, tighten the stop-loss to 16,600. Liquidate all the shorts at 16,350.
Supports: 16,500 and 16,350
Resistances: 16,580 and 16,650