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Taking bearish cues from the Asian market, the Indian benchmark indices Nifty 50 and Sensex began today’s session with a gap-down. Nifty 50 at 17,715 and Sensex at 59,265 are down by a little over half a per cent each. The major Asian indices like Nikkei 225 (26,910), ASX 200 (7,442), Hang Seng (21,916) and KOSPI (2,700) have lost between 0.7 and 1.6 per cent.
Despite the Nifty 50 being down, the market breadth is indicating neutrality i.e., the advance/decline ratio stands at 25/25. Interestingly, all mid- and small-cap indices have gained between 0.2 and 0.8 per cent. Among the sectoral indices, the Nifty Realty is the top gainer, up by 1.4 per cent whereas the Nifty IT is the top loser, down by 0.75 per cent.
Futures: The April futures of the Nifty 50 index opened today’s session lower at 17,768 versus yesterday’s close of 17,867. Although it declined to mark an intraday low of 17,735 the contract has recovered and is currently hovering around 17,830. Notably, the price level of 17,750 is a support.
So, the contract might see a recovery to the nearest resistance at 17,925. But a rally beyond that level is less likely and the Nifty futures might start another leg of downtrend from 17,925. A decline from that level is likely to drag the contract below 17,750; possibly to 17,600 — the immediate support below 17,750. A breach of this level can result in further fall to 17,500.
Given the above conditions, traders can initiate fresh shorts at current level of 17,830 and add more shorts when the contract rallies to 17,925. Place stop-loss at 18,000. when price slips below 17,750, tighten the stop-loss to 17,925. On a fall to 17,600, liquidate three-fourth of the shorts and then revise the stop-loss to 17,725. Exit the remaining at 17,500.
Strategy: Initiate fresh shorts at current level of 17,830 and add more shorts when the contract rallies to 17,925. Place stop-loss at 18,000. When price slips below 17,750, tighten the stop-loss to 17,925. On a fall to 17,600, liquidate three-fourth of the shorts and then revise the stop-loss to 17,725. Exit the remaining at 17,500.
Supports: 17,750 and 17,600
Resistances: 17,925 and 18,000
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