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The Indian benchmark indices — the Nifty 50 (17,950) and the Sensex (60,280) — opened today’s session lower compared to yesterday’s closing level.
Both have declined to post the open and are now down by nearly 1 per cent each so far today.
Equity markets across Asia are also facing downward pressure. Among the major indices, Nikkei 225 (26,240), ASX 200 (7,110), Hang Seng (19,575) and KOSPI (2,315) have lost between 0.5 and 1.7 per cent.
Coming back to the domestic market, the market breadth of the Nifty 50 index is showing a clear bearish bias as the advance/decline ratio stands at 5/45.
All the mid- and small-cap indices too are in the red. Among the sectoral indices, barring the Nifty Pharma (up by 0.3 per cent), all others have fallen. The Nifty PSU Bank and the Nifty Media are the top losers, down by 3.5 and 2.7 per cent, respectively.
Nifty 50 futures
The December futures of the Nifty 50 index opened with a gap-down today at 18,055 versus yesterday’s close of 18,170. It has now declined further to the current level of 18,010.
The contract has support of 18,000. Although there might be a rally on the back of this level, given the current downward momentum, the upside can be limited where it will largely be a corrective one.
The rally can be capped between 18,100 and 18,130 and then we expect the contract to resume in the fall. Note that there is also a chance for the index to fall below 18,000 without seeing this corrective up move.
The immediate support below 18,000 can be seen at 17,900. Subsequent support is at 17,750.
Trading strategy
Traders can consider going short at the current level of 18,010. Add more shorts when the price rallies to 18,100. Place stop-loss at 18,150.
When the contract falls below 17,950, move the stop-loss down to 18,025. On a fall below 17,850, tighten the stop-loss further to 17,950. Exit the shorts at 17,800.
Note that this is an intraday trade recommendation. So, exit the position by the end of the day if either target or stop-loss levels are not hit.
Supports: 17,900 and 17,750.
Resistance: 18,100 and 18,130.
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