Domestic benchmarks Nifty 50 (18,630) and Sensex (62,700) are trading flat today despite an uptick in major Asian equity indices. ASX 200 (7,280), Hang Seng (18,300) and KOSPI (2,460) have gained between 0.4 and 1 per cent, while Nikkei 225 (27,940) is down by one-third of a per cent.
Although the domestic market appears to lack trend, there are signs that give it a positive inclination. The market breadth of the Nifty 50 is bullish as the advance/decline ratio stands at 30/20 and the mid- and small-cap indices are in the green. So, there are chances for the benchmark indices to rally from here or after a minor dip.
Nifty 50 futures
The December futures of the Nifty 50 index opened the day almost flat at 18,736 versus yesterday’s close of 18,733. It is currently trading at around 18,730.
Yesterday, the contract fell off to 18,800 and thus it can be a barrier. But a breach of this can lift Nifty futures quickly to 18,900.
On the downside, there is a support band between 18,680 and 18,700. A break below this can drag the contract towards the next support which is at 18,600.
In a nut shell, the overall trend is bullish, and we expect the support at 18,680 to hold. Either the contract can resume the rally from the current levels or after a decline to the support band of 18,680–18,700.
Trading strategy
Buy Nifty futures now i.e., around 18,740. Add more longs when price dips to 18,700. Place stop-loss at 18,640.
When the contract crosses over 18,800, modify the stop-loss to 18,700. Exit the longs at 18,900.
Supports: 18,680 and 18,600
Resistance: 18,800 and 18,900