Indian benchmark indices are taking a breather after declining sharply over the last two trading days. Sensex and Nifty 50 are trading marginally higher. Sensex, at 57,308, is up 0.28 per cent while the Nifty 50 is up 0.17 per cent at 17,045.
Nifty made an intraday high of 17,175.6 and has been falling since. Key intraday support will be at 17,000-16,980. A further fall is likely only if the index breaks below 16,980. This can drag the Nifty down to 16,800-16,770 and even lower in the coming sessions. If the Nifty manages to sustain above 16,980, we can see a sideways consolidation between 16,980 and 17,200 for a few sessions.
Global indices
Asian markets are trading mixed. Nikkei 225 (26,587) and Shanghai Composite (3,059) are up 0.59 and 0.26 per cent, respectively. Hang Seng (17,665) and Kospi (2,207) are down 1 and 0.59 per cent, respectively.
In the US, the Dow Jones Industrial Average (29,260.81) is declining towards 28,900, in line with our expectation. A corrective rally from around 28,900 is possible. But if the Dow breaks below 28,900 then there could be a much steeper fall to 28,200-28,000.
Nifty Futures
The Nifty 50 September Futures (17,040) is trading flat. The support for the futures contract is also nearing 16,980. So a further fall is possible only if the contract breaks below 16,980. Such a break can drag the contract lower to 16,850 and even 16,700 in the coming sessions.
Traders can take fresh short positions only on a break below 16,980. Keep the stop-loss at 17,065. Trail the stop-loss down to 16,940 as soon as the contract falls to 16,880. Move the stop-loss further down to 16,860 when the contract touches 16,810 on the downside. Book profits at 16,780.
If the contract manages to sustain above 16,980, a sideways range of 16,980-17,200 is possible.
Trading strategy: Go short on a break below 16,980. Keep the stop-loss at 17,065 for the target of 16,780. Trail the stop-loss down to 16,940 as soon as the contract falls to 16,880. Move the stop-loss further down to 16,860 when the contract touches 16,810 on the downside.
Supports: 16,980, 16,850
Resistances: 17,080, 17,200