Nifty 50 began today’s session slightly higher at 22,490 versus yesterday’s close of 22,443. The domestic benchmark opened on a positive note following a rally in major Asian indices.

Key Asian indices like Nikkei 225 (38,770), ASX 200 (7,780) and KOSPI (2,730) are up between 1.3 and 2 per cent.

However, soon after a gap-up open, Nifty 50 made a U-turn and started falling. It is currently hovering around 22,360, down by about 0.4 per cent after the initial hour of trade.

All mid- and small-cap indices, too, have lost. In addition, barring Nifty FMCG (up 2.5 per cent), other sectors are in the red. This hints at a broad-based selling, which increases the probability of further fall from here.

Among the sectors, Nifty Private Bank and Nifty Metal, down nearly 1 per cent each, are the top laggards.  

Nifty 50 futures

The May futures of Nifty 50 opened today’s session flat despite the underlying’s positive open. It began at 22,545 compared to yesterday’s close of 22,550. It is now being quoted at 22,460, down 0.4 per cent so far today.

As the contract has invalidated the support at 22,500, the outlook has turned bearish. The nearest notable support is the price band of 22,200-22,250.

For the Nifty futures to cancel out the bearish inclination, it ought to reclaim 22,500-mark, which looks unlikely given the momentum of selling. Therefore, traders can consider initiating fresh short positions on Nifty futures.

Trading strategy

Sell Nifty futures now at 22,460. Add more shorts if the contract rises to 22,500. Place stop-loss at 22,600. When the contract declines to 22,350, tighten the stop-loss to 22,420.

Bring the stop-loss further down to 22,360 when the price softens to 22,300. Book profits at 22,250.

Supports: 22,250 and 22,200

Resistance: 22,500 and 22,600

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