Nifty 50 (18,260) and Sensex (61,700) are trading with a bearish bias. This is largely due to the bearish cues from the Asian market.

Except for Nikkei 225 (30,800), up by 0.35 per cent, other major indices like ASX 200 (7,135), Hang Seng (18,680), and KOSPI (2,550) are down in the 0.5-2.1 per cent.

In the domestic market, the market breadth seems to indicate a bearish bias as well. For instance, the advance/decline ratio stands at 18/32. 

Among the sectors, Nifty FMCG, up by 0.5 per cent, is the top gainer among the very few indices that are in the green. At the other end, Nifty Metal, which has lost nearly 0.9 per cent so far today, is the top loser.

Overall, there is a clear bearish bias today. However, today the May contracts expire and we might see above-average volatility. So, participants need to be cautious.

Nifty 50 futures

On the day of expiry, the May futures contract of Nifty 50 began a little lower at 18,270 versus yesterday’s close of 18,296. If further declined and is now hovering around 18,260. There is support immediately at 18,240.

If the contract, on the back of the bearish inclination, slips below the support at 18,240, we might see a quick fall to 18,100. Subsequent support is at 18,000.

But if the contract rebounds from the 18,240-18,260 price band, it can face resistance at 18,300 and 18,375. Subsequent resistance is at 18,470.

Trading strategy

We recommend staying on the sidelines although the bias is bearish.

Go short on Nifty futures only if it breaks below the support at 18,240. The target and stop-loss for this trade can be 18,100 and 18,310, respectively.

This is an intraday trade recommendation. Exit the positions just before the session closes irrespective of the price.

  • Supports: 18,240 and 18,100.
  • Resistance: 18,300 and 18,375.