Nifty call: Sell the contract with stop-loss at 9,280

Nifty 50 May futures (9,200)

Equity markets across Asia have been in a slump since morning, which has also weighed on the Indian market. The Indian benchmark indices i.e. the Nifty spot and the Sensex spot indices are trading lower by about 1.8 per cent. The major Asian indices, including the Nikkei,Hang Seng and the Shanghai composite are down by 1.6 per cent, 1.5 per cent and 0.7 per cent, respectively. Also, the US indices posted a loss yesterday; while the S&P500 lost 1.7 per cent, the Dow 30 lost 2.2 per cent.

The market breadth of the Nifty 50 index exhibits considerable bearish bias as the advances-declines ratio currently stands at 12-38. Like the benchmarks, the mid-cap and small-cap indices have been witnessing downward pressure since the open. Among the sectoral indices, the Nifty Pharma index and the Nifty FMCG index have gained nearly 1.2 per cent each. All the other indices are down, led by the Nifty IT index, down by 2.7 per cent. Interestingly though, volatility has dropped, despite the market facing selling pressure. The volatility index – India VIX, has come down by 2.5 per cent to 37.9 levels.

The May futures contract of the Nifty index began the session with a considerable gap-down. It opened at 9,242 versus its previous close of 9,393. After marking an intra-day low of 9,196, the contract currently trades around 9,200. The price has now slipped below the 21-day moving average (now at 9,270) and price action on the daily chart shows a bearish bias. Hence, traders can short the contract for intra-day with stop-loss at 9,280.

Strategy: Sell the contract with stop-loss at 9,280

Supports: 9,140 and 9,050

Resistances: 9,270 and 9,300

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