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The Indian benchmarks – the Nifty 50 and the Sensex – hit a four-week high on Monday after opening the week on the front foot. Currently trading at 16,650 and 55,920, the Nifty 50 and the Sensex are now up by nearly 1.8 per cent for the day. The Asian markets, too, are in the green, substantiating the positivity for the day so far. The major Asian indices, Nikkei 225, ASX 200, Hang Seng and KOSPI are up in the range of 1.2 to 2.3 per cent.
The market breadth of the Nifty 50 index is indicating bullishness as the advance-decline ratio of the index is currently at 44-6. The mid- and small-cap indices are in the green where most of them have gained over 2 per cent.
All the sectoral indices too have gained led by the Nifty IT, up by 3.7 per cent followed by the Nifty Realty, up by 3.3 per cent. This is an indication of a broad-based buying. The volatility has dropped as shown by India VIX – the volatility index. It has tumbled nearly 5.5 per cent to 20.32.
The above factors show a clear bullish bias today and the market will most likely close in the green. So, short positions are not recommended for intraday whereas dips can be seen as an opportunity to go long.
Futures: Following a strong gap-up open in the underlying Nifty 50, the June futures opened today’s session higher at 16,461 compared to Friday’s close of 16,327. Currently trading at around 16,630, it is hovering around the day’s high of 16,638.
The contract will most likely extend the rally and is expected to touch 16,700. A breach of this level can lift the contract quickly to 16,800. Also, the possibility of the Nifty futures touching 17,000 this week cannot be ruled out.
For intraday, traders can consider initiating fresh longs at the current level of 16,630. Accumulate more longs in case if there is an intraday dip to 16,575. Place stop-loss at 16,480.
When the contract rallies past 16,700, move the stop-loss up to 16,580. Liquidate half of the longs at 16,800 and then tighten the stop-loss to 16,700. Exit the longs at 16,950.
Strategy: Consider initiating fresh longs at the current level of 16,630. Accumulate more longs in case if there an intraday dip to 16,575. Place stop-loss at 16,480.
When the contract rallies past 16,700, move up the stop-loss to 16,580. Liquidate half of the longs at 16,800 and then tighten the stop-loss to 16,700. Exit the longs at 16,950.
Supports: 16,580 and 16,500
Resistances: 16,800 and 17,000
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