The Nifty 50 (19,400) and Sensex (65,340) began Wednesday’s session with a gap-down. Although they have recovered after opening, both are down by about 0.15 per cent each.

The equity market is facing downward pressure across Asia. Major indices such as the Nikkei 225 (31,860), ASX 200 (7,200), Hang Seng (18,300) and KOSPI (2,530) are down between 1.2 and 1.7 per cent.

Substantiating the bearish sentiment in the domestic market, the advances/declines ratio of the Nifty 50 is at 17/33. Interestingly, the mid- and small-cap indices look mixed. Among the sectors, Nifty Media, up by 0.9 per cent, is the top gainer, whereas Nifty Metal, down by 0.9 per cent, is the worst performer so far today.

While the Indian market appears relatively strong compared with its Asian peers, the benchmark indices should cross over a key resistance level in order to establish a sustainable rally.

Nifty 50 futures

The August futures contract of the Nifty 50 opened today’s session lower at 19,400, versus Monday’s close of 19,478. It has now inched up to 19,425.

The overall trend has been bearish, with a strong barrier at 19,500. So, we expect the contract to resume the downtrend anytime.

The nearest notable support is at 19,350. A breach of this level can drag the contract to 19,250. On the other hand, if the Nifty futures rallies past the resistance at 19,500, it will most likely extend the upswing to 19,700. However, this is unlikely to occur given the broader bearish bias.

Trading strategy

Even though the inclination is bearish, the risk-reward is unfavourable for fresh short positions at the current level, especially for intra-day positions.

So, we suggest traders wait and go short in case Nifty futures rally to 19,490. Target and stop-loss for this trade can be at 19,350 and 19,560.

Supports: 19,350 and 19,250

Resistance: 19,500 and 19,550