The sell-off in the Nifty 50 and Sensex continues. The benchmark indices are under pressure for the fourth consecutive day. Sensex is trading at 66,054, down 0.26 per cent and Nifty at 19,674 is down about 0.35 per cent.

Nifty is more likely to test 19,600-19,500. The region around 19,500 is an important support. Failure to bounce from this support will intensify the selling pressure. In that case, Nifty can fall to 19,300-19,200. On the other hand, a bounce from 19,500 can give an relief rally towards 19,700-19,800.

Global indices

Asian markets are little mixed. Hang Seng (17,868) and Shanghai Composite (3,108) are up 1.2 and 0.77 per cent respectively while Kospi (2,507) and Nikkei 225 (32,414) are down 0.36 and 0.48 per cent respectively.

In the US, the Dow Jones Industrial Average (34,070) tumbled 1.08 per cent on Thursday. The index has declined below the key support level of 34,200. It looks vulnerable to see 33,800-33,700 on the downside now. Thereafter the price action will need a close watch to see if the Dow Jones is managing to bounce back or not.

Nifty 50 Futures

The Nifty 50 September Futures (19,730) contract is down 0.25 per cent. Key resistances are at 19,770 and 19,820. As long as the contract trades below these resistances, the outlook will remain bearish. A fall to 19,650-19,600 looks likely to be seen in the coming sessions.

A strong rise past 19,820 is needed to ease the downside pressure and trigger a rise towards 19,900 and 20,000 again. But that looks less likely as of now.

Trade Strategy

Traders can wait for a rise. Go short at 19,760 and 19,810. Keep the stop-loss at 19,840. Trail the stop-loss down to 19,740 as soon as the contract moves down to 19,720. Move the stop-loss further down to 19,710 when the contract touches 19,690 on the downside. Exit the shorts at 19,670.

Supports: 19,650, 19,600

Resistances: 19,970, 19,820.

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