Nifty 50 August Futures (10,922)

The Sensex and the Nifty 50 started the session on a weak note, with a gap-down open in the midst of mixed Asian markets. The Nikkei 225 index has surged 2.2 per cent to 22,195 while the Hang Seng index has tumbled 0.9 per cent to 24,366 levels.

Both the Sensex and the Nifty 50 continued to trend downwards on the back of selling interest and have tumbled 1.5 per cent and 1.4 per cent, respectively. The market breadth of the Nifty index is biased towards declines. On the other hand, the volatility index — India VIX — has jumped 4 per cent. Both the Nifty mid and small-cap indices are hovering in the positive territory, advancing 0.2 per cent and 0.8 per cent, respectively. Among the sectoral indices, the Nifty Pharma is the top gainer, surging 1 per cent. The top losers are Nifty PVT Bank and Nifty Bank, which have slumped 2.9 per cent and 2.5 per cent, respectively.

The Nifty 50 August month contract commenced the session with a gap-down open at 10,993. After an initial rally, it recorded an intra-day high at 11,029 and began to decline. The contract has recorded an intra-day low at 10,905. The near-term outlook is bearish for the contract. Traders can make use of intra-day rallies to initiate fresh short positions while maintaining a stop-loss at 10,075. Continuation of the downtrend can drag the contract to test support at 10,900. A decisive fall below this base can pull the contract down to 10,870 and then to 10,850 levels. On the upside, a strong rally above 11,000 can witness a corrective up-move to 11,030 and then to 11,050 levels.

Strategy: Sell on rallies while maintaining a stop-loss at 10,075 levels

Supports: 10,900 and 10,870

Resistances: 10,975 and 11,000

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