The Indian benchmarks today witnessed a huge gap-down open and the Nifty spot and the Sensex spot indices are down for the day by 4.9 per cent and 5.2 per cent, respectively. The Asian markets too are under pressure where the Hang Seng is down by a little over 4 per cent, and the Kospi is down by 2.8 per cent. The Nikkei and the Shanghai composite indices are closed due to public holiday.

The market breadth of the Nifty 50 index is showing a substantial bearish condition as the advance-decline ratio is at 3-47. All the mid-cap and the small-cap indices are in the red, and consequently, all the sectoral indices are trading lower. The Nifty metal index and the Nifty private bank index are the top losers, each down by 7.5 per cent. This is followed by Nifty Bank index and the Nifty financial services index, each down by 7.2 per cent. The volatility has shot up heavily by about 27 per cent to 43.3 levels, indicating increased fear in the market.

The May futures contract of the Nifty index opened at 9,418, significantly lower compared to last week’s close of 9,830. From then on, the contract has been weakening where it marked the day’s low at 9,325. But the contract has come up a little and is hovering at 9,340 levels. On the other hand, 9,400 can act as a solid resistance, and until the price remains below that level, bears can be expected to dominate. So, traders can initiate fresh short positions on rallies with stop-loss at 9,420.

Strategy: Short on rallies with stop-loss at 9,420

Supports: 9,275 and 9,200

Resistances: 9,400 and 9,450

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