It is green all over as the equity markets across Asia have gained today. Among the major indices, ASX 200 (6,928), Nikkei 225 (27,550), Hang Seng (16,748) and KOSPI (2,370) are up in the range of 0.6–3.6 per cent.
Following this, the Indian equity benchmarks opened the week on the front foot. However, both Nifty 50 (18,160) and Sensex (60,990) saw a drop immediately after the open. While the former is up by 0.2 per cent compared to Friday’s close, the latter is flat at this juncture.
The market breadth of the Nifty 50 is bullish as the advance/decline ratio stands at 32/18. All the mid- and small-cap indices are up between 0.3 and 0.7 per cent. Most of the sectors have appreciated today led by the Nifty PSU Bank index, up by nearly 5 per cent. This is followed by the Nifty Metal, up by 1.9 per cent. On the other hand, the Nifty Pharma is the top loser, down by nearly 0.7 per cent.
The overall trend is bullish and the equity market per se appears positive. Therefore, if at all there are any declines, we expect it to be limited and those can be opportunities to buy afresh.
Nifty 50 futures
The November futures of the Nifty 50 index opened the week higher at 18,295 versus last week’s close of 18,194. But it gave up all the gains and is now trading flat at 18,190 i.e., near the previous closing price.
Looking at the pace of the decline since today’s open, the contract is likely to witness a drop to the nearest support at 18,140. Subsequent support is at 18,070. We do not expect the contract to pierce below 18,070 today.
Whereas the Nifty futures can be expected to recover at either 18,140 or 18,070. Such a bounce can lift its price to 18,300.
Given the above expectations, we suggest staying out for now and initiate fresh longs on a dip to 18,140. Add more longs if the contract dips further to 18,070. Place initial stop-loss at 17,985.
When the contract rallies after triggering our pending long positions, shift the stop-loss up to 18,100. Further, on a rally to 18,275, tighten the stop-loss to 18,200. Exit all the longs at 18,300.
Supports: 18,140 and 18,070
Resistance: 18,300 and 18,400