Nifty Call: Go short with stop-loss at 16,400

Nifty 50 May Futures (16,150)

The Asian markets look positive as the major indices are trading in the green. That is, Nikkei 225, ASX 200 and Hang Seng are up in the range of 0.2 – 1.5 per cent. KOSPI is trading flat. Following this, the Indian benchmark indices i.e., Nifty 50 (16,150) and Sensex (54,040), opened with a gap-up. However, both the indices gave up the gains and is now down by 0.5 per cent each.

The market breadth of the Nifty 50 is showing a bearish bias as the advance-decline ratio stands at 16-34. Like the benchmark indices, all the mid- and small-cap indices are down between 0.5 and 2.4 per cent. Among the sectoral indices, the Nifty Bank and Metal are the best performing indices, up by 0.2 per cent each. On the other hand, Nifty FMCG and IT are the top losers, down by 1.4 and 1.2 per cent, respectively.

Futures: The May futures of the Nifty 50 index opened today’s session slightly higher at 16,256 versus yesterday’s close of 16,247. But then, since the beginning of the session, it is on a decline and is now trading around 16,150 i.e., 0.6 per cent down for the day.

The bias is bearish, and the contract is likely to decline below 16,000 and drop to 15,800. But before falling below 16,000, the contract could rally to 16,200 and possibly to 16,350. Therefore, traders can initiate short when price moves up to 16,200. Add more shorts when the contract rallies to 16,350. Place stop-loss at 16,400. When Nifty futures drop below 16,000, revise the stop-loss down to 16,200. Exit all the shorts at 15,800.

Strategy: Initiate short when price moves up to 16,200. Add more shorts when the contract rallies to 16,350. Place stop-loss at 16,400. When Nifty futures drop below 16,000, revise the stop-loss down to 16,200. Exit all the shorts at 15,800

Supports: 16,000 and 15,800

Resistances: 16,200 and 16,350

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