A rebound can lift Nifty futures to 19,800 today
Nifty 50 (19,670) and Sensex (66,330) are trading flat now after opening with a gap-up.
That said, the market breadth is showing a bullish bias. For instance, the advance/decline ratio of Nifty 50 stands at 29/21. Besides, the mid-and small-cap indices are in the green and the volatility has imploded today. The volatility index – India VIX – has crashed nearly 9 per cent to 10.70 level.
Among the sectors, Nifty Metal, up by 1.7 per cent, is the top gainer whereas Nifty FMCG, down by 1.1 per cent, is the top loser.
The Asian equity market does not send clear cues as the major indices look mixed. Among them, Nikkei 225 (32,600) is down by 0.3 per cent. ASX 200 (7,335) and Hang Seng (19,280) are up by 0.4 and 3.2 per cent, respectively. On the other hand, KOSPI (2,630) is trading flat so far.
Nifty 50 futures
The July futures contract of Nifty 50 opened today’s session higher at 19,744 versus yesterday’s close of 19,693. It immediately started to decline and has given up the gains and is now hovering around 19,685 i.e., near yesterday’s closing level.
As it stands, the contract seems to be stuck in the range of 19,680-19,800. A breach of this price band will give us the clue about the next possible swing in price.
If Nifty futures fall below 19,680, it can fall to 19,610 or even to 19,550. On the other hand, if the contract rallies past 19,800, it will most likely touch 20,000.
Even though Nifty futures is trading between two important levels, it is currently testing a support. So, the risk-reward is favourable for long positions.
So, traders can buy Nifty futures at the current level of 19,685 with a stop-loss at 19,640. Book profits at 19,800.
After initiating this trade, if the contract falls and triggers the above stop-loss of longs at 19,640, we can assume that the support at 19,680 is clearly breached. This will significantly increase the probability of a fall.
Hence, in such a case, go short if the stop-loss of the longs are hit. Target and stop-loss for this short position can be at 19,550 and 19,680.
Note that the above mentioned recommendations are for intraday.
Supports: 19,610 and 19,550
Resistance: 19,800 and 20,000