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The Indian benchmark indices, Nifty 50 (17,630) and Sensex (59,670), which began the session with a gap-up, have now fallen to last week’s closing level, effectively flat for the day. The benchmark indices could not hold on to the gains as the cues are bearish from their Asian peers.
Among the major Asian equity indices, ASX 200 (7,325), Hang Seng (19,960), and KOSPI (2,525) are down between 0.1 and 0.8 per cent. As an exception, Nikkei 225 (28,625) is up by 0.2 per cent.
The bearish inclination in the domestic market can also be seen in the market breadth. For instance, the advance/decline ratio of the Nifty 50 index stands at 20/30. Among the sectors, Nifty PSU Bank index is the top gainer, up by 1 per cent, whereas Nifty Media, down by 1.7 per cent, is the top loser so far.
Nifty 50 futures
Consequent to the gap-up open in the underlying Nifty 50, the April futures of the index began today’s session higher at 17,715 versus last week’s close of 17,657. But, it has now declined to 17,670.
For the contract, the price range of 17,620-17,750 remains relevant and unless either of these levels are invalidated, we cannot predict the next leg of trend with reasonable accuracy.
If the contract recovers and breaks out of 17,750, we are likely to witness a swift rally to 17,900 – the nearest resistance above 17,750. On the other hand, if the contract falls below the support at 17,620, it might drop quickly to 17,500.
Trading strategy
Considering the above factors, traders can stay on the fence for now and take positions along the direction of break of the 17,620-17,750 range.
Go long with stop-loss at 17,690 if Nifty futures break out of 17,750. Book profits at 17,850.
But if the contract falls below 17,620, initiate short positions with stop-loss at 17,680. Exit the shorts at 17,500.
Note that the above trade recommendation is for intraday. So, exit the positions by the end of the day if neither target nor stop-loss is triggered.
Supports: 17,620 and 17,500
Resistance: 17,750 and 17,900
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