Nifty call: Initiate intraday shorts when contract falls below support at 16,580

Akhil Nallamuthu | | Updated on: Jul 25, 2022

Nifty 50 July Futures (16,600): Place stop-loss at 16,660

The Indian benchmark indices began today’s session with a gap down following negative cues from the Asian markets. The Nifty 50 at 16,615 and the Sensex at 55,695 are up by 0.65 per cent each. Among the major Asian indices, Nikkei 225, ASX 200 and Hang Seng are up in the range of 0.15-0.7 per cent.

The market breadth of the Nifty 50 is showing a bearish bias as the advance/decline ratio 17/33. The Midcap 50 and the Smallcap 50 are down by 0.2 and 0.8 per cent, respectively and all the sectoral indices, barring the Nifty Metal (up by 0.7 per cent) are in the red. The Nifty Oil & Gas is the top loser, down by 1.6 per cent. So, broadly, the market is bearish today and thus, the indices can see more decline today.

Futures: Like the underlying Nifty 50, the July futures of the index opened with a gap-down today at 16,680 versus Friday’s close of 16,722. The contract declined post opening and is currently trading around 16,600.

Although the bias is bearish, the contract has a support of 16,580 which can help the index in arresting the fall. Therefore, one needs to wait before pulling the trigger.

That is, traders can stay away for now and initiate intraday shorts when the contract falls below the support at 16,580. Place stop-loss at 16,660. When the contract slips below 16,500, a support level, tighten the stop-loss to 16,500. A breach of 16,500 can drag the contract to 16,350 from where there could be a bounce. So, liquidate all the shorts at 16,350.

Strategy: Initiate intraday shorts when the contract falls below the support at 16,580. Place stop-loss at 16,660. When the contract slips below 16,500, tighten the stop-loss to 16,500. Liquidate all the shorts at 16,350.

Supports: 16,500 and 16,350.

Resistances: 16,650 and 16,750.

Published on July 25, 2022
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