Domestic equity benchmarks NSE Nifty 50 (18,095) and BSE Sensex (60,810) opened today’s session lower compared to yesterday’s close.
While it rallied initially, both the indices have given up the gains and are now down by 0.2 per cent each.
Across Asia, most of the major indices are in red. While Nikkei 225 (26,290) and ASX 200 (7,075) are down by nearly half a per cent each, KOSPI (2,285) has lost about 2 per cent. Nevertheless, Hang Seng (20,045) is an exception as it has gained 2.2 per cent.
In the domestic market, the advance-decline ratio of the Nifty 50 index stands at 21-29, showing a bearish bias. Considering the broader market, the sentiment looks mixed as some of the mid- and small-cap indices have gained while the others are down today.
Among the sectoral indices, the Nifty Consumer durables is the top gainer, up by 1.2 per cent, while Nifty IT became the worst performing index by losing 0.7 per cent.
Nifty 50 futures
The December futures of the Nifty 50 index opened with a gap-down today at 18,098 versus yesterday’s close of 18,138. It is now hovering around 18,100.
As the underlying Nifty 50 index is facing a key resistance, the future contract, too, is facing a hurdle at 18,130. While the breach of this resistance can lead it to another leg of rally, the first test of 18,130 today has been unsuccessful.
If the contract falls from the current level, it will have support at 18,000 and 17,900. On the other hand, if 18,130 is breached, it can rally towards the nearest resistance at 18,300. Subsequent resistance is at 18,450.
Trading strategy
Given the bearish trend since early this month, there is a chance that the rally so far this week might be a corrective one. Also, the Nifty 50 index and its futures are now facing a barrier.
Against this backdrop, one can take risk by going short at the current level of 18,100 with stop-loss at 18,160. Book profits if it falls to 17,950.
If the contract rallies and hits the stop-loss of 18,160, we can assume that it has broken the barrier at 18,130. Thus, one can initiate fresh longs if the stop-loss of the above recommended short-level is triggered.
For long positions, stop-loss and target can be 18,100 and 18,300, respectively.
Note that the above trade recommendations are for intraday. So, exit the positions by the end of the day if either target or stop-loss levels are not hit.
Supports: 18,000 and 17,900
Resistance: 18,130 and 18,300