Nifty call: Short Nifty futures at the current level of 15,750

Akhil Nallamuthu | | Updated on: Jun 29, 2022

Nifty 50 June Futures (15,750): When the contract drops below 15,680 tighten the stop-loss to 15,800

Asian equity markets are trading with a bearish undertone and major indices like ASX 200, Nikkei 225, Hang Seng and KOSPI are down in the range of 0.9-1.8 per cent. Following this, the Indian benchmark indices — the Nifty 50 and the Sensex — opened today’s session with a considerable gap-down. Currently, Nifty 50 at 15,775 and Sensex at 52,935 are down by nearly half a per cent each so far today.

The market breadth of the Nifty 50 index is bearish as the advance/decline ratio stands at 6-44. Moreover, all the mid- and small-cap indices are in the red indicating a broad-based sell-off today.

Among the sectoral indices too, barring the Nifty Media (up by 0.2 per cent) and the Nifty oil and gas (up by 0.5 per cent), all others are down. The Nifty FMCG is the top loser, down by 1.1 per cent followed by the Nifty Bank, down by 1 per cent. Therefore, the broader bias today is bearish, and the benchmark indices are expected to decline further.

Futures: Like the underlying Nifty 50, the June futures of the index opened today’s session lower at 15,701 compared to yesterday’s close of 15,848. After marking an intraday low of 15,678 it recovered and is currently hovering around 15,750.

The price action looks bearish, and the recovery might not extend too far from here. From the current level, the nearest resistance is seen at 15,800, which is a strong hurdle to cross. Above this resistance is another one at 15,840. A rally beyond 15,840 is less likely.

We expect the contract to resume the downtrend from here. Although 15,680 can offer some support, the Nifty futures will most probably fall below this and touch 15,625. A breach of this level can drag the contract to 15,500.

Given the above factors, we suggest traders short Nifty futures at the current level of 15,750 and add more shorts when it rallies to 15,800. Place initial stop-loss at 15,850. When the contract drops below 15,680 tighten the stop-loss to 15,800. Revise it further down to 15,725 if Nifty futures slip below 15,625. Exit the shorts at 15,500.

Strategy: Short Nifty futures at the current level of 15,750 and add more shorts when it rallies to 15,800. Place initial stop-loss at 15,850. When the contract drops below 15,680 tighten the stop-loss to 15,800. Revise it further down to 15,725 if the contract slips below 15,625. Exit the shorts at 15,500.

Supports: 15,680 and 15,625.

Resistances: 15,800 and 15,840.

Published on June 29, 2022
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