Nifty 50 April futures (22,466)

Nifty 50 has begun the week on a negative note. The index opened with a wide gap-down and is now trading 22,352, down 0.75 per cent. The weakness in the global equity markets is weighing on the Nifty. The advance/decline ratio is at 6:44. This is a negative and it indicates that more fall could be on the cards for the day.

Nifty 50 outlook

The index made an intraday low of 22,263 and is attempting to bounce from there. Intraday resistances are at 22,450 and 22,530.  Even if a rise is seen from current levels, the upside can be capped either at 22,450 or 22,530. As such we expect the Nifty to come down towards 22,200 by today or tomorrow.

Global indices

The sell-off in the US equities is weighing on the Asian markets today. Barring the Shanghai Composite (3,055, up 1.2 per cent) other major indices are in red. Nikkei 225 (39,089) is down 1.1 per cent. Kospi (2,663) and Hang Seng (16,599) are down 0.67 and 0.73 per cent respectively.

The Dow Jones Industrial Average (37,983) in the US tumbled 1.24 per cent on Friday. The outlook is negative. The index can fall to 37200-37000 this week. Strong resistance is in the 38,400-38,500 region which can cap the upside.

Nifty 50 futures

The Nifty 50 April futures (22,466) contract is down 0.6 per cent. The contract made a low of 22,364 and has bounced back well from there. If this sustains, then a rise to 22,600-22,650 is possible during the day. But thereafter, we can expect the contract to reverse lower again.

A decisive break below 22,350 can trigger a fall to 22,200 and lower going forward.

Trading strategy

The sentiment is negative, but there is room for a rise from here before a reversal is seen. So we suggest traders to stay out of the market for now.

May be a positional trade for the week can be considered at the moment. Wait for a rise. Go short at 22,580 and also at 22,640. Keep the stop-loss at 22,710. Trail the stop-loss down to 22,560 as soon as the contract falls to 22,510. Move the stop-loss further down to 22,440 when the contract touches 22,370 on the downside. Exit the shorts at 22,240.

Supports: 22,350, 22,200

Resistances: 22,600, 22,650.