Nifty 50 July Futures (11,085)

The Indian benchmark indices are on a decline today following negative cues from Asian markets. The Nifty 50 spot and the Sensex spot indices are trading lower by 0.75 per cent and 0.6 per cent respectively. Among the Asian indices, the Hang Seng has dropped 2.5 per cent while the Shanghai composite index has dropped 3.5 per cent so far.

The market breadth of the Nifty 50 index is giving a clear bearish signal, as 43 out of the 50 stocks in the index are in the red. Like the benchmarks, the mid- and small-cap indices too are trading lower. Consequently, all the sectoral indices except the Nifty IT index (up 0.5 per cent) are down. The Nifty Bank and the Nifty Metal indices are the top losers, each down 2.5 per cent. Even as the market is witnessing a broad-based selling pressure, volatility seems to be flat. India VIX, the volatility index, at 24.65 is flat compared to Thursday’s close.

The July futures contract of the Nifty 50 index opened the session with a significant gap-down at 11,093 versus Thursday’s close of 11,207. Initially, it attempted to recover, and made an intraday high of 11,148. But then it began to decline and is now trading at 11,085. The contract has its nearest support at 11,065. If the contract breaches this level, bears might gain more momentum, pulling down the contract to 11,000. Support below that level is at 10,975. But if it rallies from the current level, the price band between 11,130 and 11,150 can act as a significant hurdle. Since the overall market sentiment appears bearish, traders can short the contract on rallies with stop-loss at 11,150.

Strategy: Initiate fresh short positions with stop-loss at 11,150

Supports: 11,000 and 10,975

Resistances: 11,130 and 11,150

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