The Nifty 50 (18,590) and Sensex (62,850) began Monday’s session with a gap-up. Although both indices have seen some softening post the open, sentiment seems to be positive.

Substantiating the bullish bias, major equity indices in Asia are in the green. Among them, Nikkei 225 (31,200) and ASX 200 (7,225) are up by 1 per cent each.

Moreover, the breadth of the domestic market is positive. For instance, the advances/ declines ratio of the Nifty 50 stands at 36/14. In addition, all the mid- and small-cap indices are in the green, showing broad-based buying.

Among the sectors, Nifty Financial Services is the top gainer, up by 1.4 per cent. On the other hand, Nifty Oil & Gas is the top loser, down by 0.7 per cent.

Nifty 50 futures

The June expiry futures of the Nifty 50 began the session higher at 18,697 versus the previous week’s close of 18,573. It has moderated a bit and is hovering around 18,670.

The overall trend is bullish and today’s gap-up open is an indication of strong momentum. Thus, we expect Nifty futures to gain further. From the current level of 18,670, we might see a rally to 18,800.

That said, there is a small chance the contract will retest the support-turned-resistance level of 18,600. Subsequent support is at 18,520.

Trading strategy

Go long on Nifty futures at the current level of 18,670. Add more longs in case the price softens to 18,610. Place stop-loss at 18,560.

When the contract rallies above 18,750, tighten the stop-loss to 18,680. Book profits at 18,800.

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

Supports: 18,600 and 18,520

Resistance: 18,800 and 18,900

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