The Indian benchmark indices – the Nifty 50 (18,375) and the Sensex (61,680) – opened today’s session gap-down. Although they have recovered a little post the open, the bias appears bearish, and the rallies are likely to be limited. Major Asian indices are trading in the red: Nikkei 225 (27,525), ASX 200 (7,165) and KOSPI (2,355) are down in the range of 0.3 – 1.9 per cent.

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The market breadth of the Nifty 50 is showing a bullish bias as the advance/decline ratio stands at 17/33. Like the benchmarks, all the mid-cap and small-cap indices have depreciated. In addition, the Nifty Oil and Gas, which is up 0.3 per cent, all other indices are down today. The Nifty PSU Bank and IT are the top losers, down by 1.7 and 1 per cent, respectively.

Nifty 50 futures

The December futures of the Nifty 50 index opened today lower at 18,367 versus yesterday’s close of 18,467. It is currently trading at around 18,400.

The contract has a resistance between 18,400 – 18,440. A rally beyond 18,440 is less likely today. We expect Nifty futures to fall to 18,260, a support level. Subsequent support is at 18,200.

But if the contract breaches the hurdle at 18,440, it can extend the rally to 18,500 and even to 18,650.

Trading strategy

Traders can consider going short at the current level of 18,400. Add more shorts when the price rallies to 18,440. Place stop-loss at 18,500. When the contract falls below 18,300, move the stop-loss to 18,400. Liquidate at 18,260.

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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: 18,260 and 18,200

Resistance: 18,440 and 18,500