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Nifty 50 November Futures (17,900)
The Indian equity benchmarks i.e., the Nifty 50 and the Sensex opened the session with a gap down against the backdrop of mixed Asian markets. However, after a sharp decline, both indices have recovered from their lows. The Nifty 50 is flat at 17,855 whereas the Sensex is down by 0.1 per cent and is at 59,890.
Among the Asian majors, the Nikkei 225 is up by 0.15 per cent, ASX 200 is down by 1.4 per cent and Hang Seng lost 0.6 per cent.
Although the Nifty 50 is flat, the breadth of the index is showing a bullish bias i.e., the advance-decline ratio is at 38-12. The mid- and small-cap indices are in the green, gaining between 0.1 and 1.1 per cent so far and the sectoral indices too shows a positive bias as most of them are in the green. The Nifty PSU bank and Media indices are the top gainers, up by 2.3 and 2.1 per cent, respectively. On the other hand, the Nifty Private bank index is the top loser, down by 0.6 per cent followed by the Financial services index, down by nearly 0.4 per cent.
Futures: Similar to the underlying Nifty 50, the November futures of the index opened lower at 17,860 versus yesterday’s close of 17,913. Even though it faced a sharp fall initially, thus marking an intraday low of 17,676, the contract made a swift recovery and is trading around 17,900 – a hurdle.
Although the price action shows some bullish sign, hinting at an extension of the recovery, the contract faces tough resistances at 17,900 and 17,960. Until the contract stays below 17,960, the intraday trend will remain bearish, and the rally can be considered as opportunities to initiate fresh short positions.
So, traders can sell Nifty futures at current level of 17,900 and short again if price rallies to 17,960. Place stop-loss at 18,010. Decline from here is likely to drag the contract again to 17,750, a support level and can possibly retest the low at 17,676. Exit half of the positions when price drops to 17,750 and revise the stop-loss to 17,820. Then carry the remaining for a target of 17,676.
Strategy: Short the contract at 17,900 and at 17,960; stop-loss at 18,010. Liquidate 50 per cent at 17,750, revise the stop-loss to 17,820 and wait for the next target at 17,676
Supports: 17,750 and 17,676
Resistances: 17,900 and 17,960
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