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It’s green all-over. Post the announcement of a 25-bps rate hike by the US Fed, the American markets, which fell initially, rallied and ended the session with a gain. Dow Jones (34,063) and the broader index S&P500 (4,358) gained by 1.6 and 2.2 per cent respectively.
Following this, the Asian markets opened on the front foot and have gained all over. While ASX 200 (7,251) and Nikkei 225 (26,650) are up by 1 and 3.4 per cent, respectively, Hang Seng (21,290) and KOPSI (2,705) have gained 5.9 and 1.7 per cent, respectively.
By taking the above positive cues, Indian benchmark indices saw a considerable gap-up open. Currently, the Nifty 50 and the Sensex are at 17,260 and 57,815 respectively, gaining by about 1.7 per cent each.
The market breadth of the Nifty 50 shows a bullish bias as the advance-decline ratio stands at 45-5. All mid- and small-cap indices are up, gaining between 1.2 and 1.8 per cent. Moreover, all the sectoral indices are in the green. Adding to the positive sentiment, volatility has dropped as indicated by India VIX – down by over 7 per cent to 22.3. Therefore, there is less fear in the market and the buying seems to be broad based.
Futures: The March futures of the Nifty 50 index opened with a gap-up, like the underlying, at 17,218 versus yesterday’s close of 17,009. It then rallied to mark an intraday high of 17,298 and is currently trading at 17,270. Thus, the contract is well above the 17,000-mark and is now above another important level of 17,200 as well. The price action shows bullish inclination, and the rally is likely to continue. But it could retest 17,200 before moving past the day’s high of 17,298.
Given the above factors, traders can go long at the current level of 17,270 and accumulate more when price dips to 17,200. Place initial stop-loss at 17,100. Move the stop-loss up to 17,220 if the contract rallies past 17,300. Tighten it further to 17,300 if the futures break out of 17,400. Liquidate all the longs at 17,500.
Strategy: Go long at the current level of 17,270 and accumulate more when price dips to 17,200. Place initial stop-loss at 17,100. Move the stop-loss up to 17,220 if the contract rallies past 17,300. Tighten it further to 17,300 if the futures break out of 17,400. Liquidate all the longs at 17,500.
Supports: 17,200 and 17,025
Resistances: 17,300 and 17,500
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