Nifty Call: Hold short positions with stop-loss at 16,720

Nifty 50 July Futures (16,642)

Sensex and Nifty 50 are trading marginally higher. Sensex is at 55,777, up 0.17 per cent and Nifty 50 is trading at 16,634, up 0.18 per cent. Nifty made a high of 16,704 and has come-off holding 16,670 resistance well for now. A sustained rise past 16,700 is needed for the Nifty to extend the current rally up to 16,800 and higher levels. A fall below 16,600 can drag it down to 16,500 – an important support to watch on the downside. The current uptrend will reverse if the Nifty falls below 16,500. Such a break can drag the Nifty down to 16,350-16,250.

Global Indices

The Asian major indices are trading mixed. Nikkei 225 (27,924) and Hang Seng (20,598) are up 0.44 and 0.12 per cent, respectively. Shanghai Composite (3,261) and Kospi (2,401) are down 0.33 per cent each.

In the US, the Dow Jones Industrial Average (32,036, up 0.51 per cent) is showing some sign of strength. If it manages to sustain above 32,000, a further rise to 32,800-33,000 is possible.

Nifty Futures

The Nifty 50 July Futures (16,642) is up 0.27 per cent. It touched a high of 16,690 and has come-off. We expect the contract to trade below 16,700 and fall towards 16,500 in the coming sessions. A further break below 16,500 will be bearish and can trigger a steeper fall next week. The price action at today’s close would set the tone for next week.

Trading Strategy

Yesterday we had suggested to go for positional short positions at 16,590 and 16,640. Both these orders have been triggered. The average entry is at 16,615. Retain the stop-loss at 16,720 with a slight revision in the strategy. Trail the stop-loss down to 16,580 as soon as the contract falls to 16,520. Move the stop-loss further down to 16,490 when the contract falls to 16,460. Book profits at 16,410.

Supports: 16,600, 16,500

Resistances: 16,700, 16,800

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