Nifty 50 (18,380) and Sensex (62,290) have opened the week on the front foot with a gap-up open. The price action shows that the indices could gain more today.

Substantiating the positive inclination, the Asian equity market is bullish – among the major indices Nikkei 225 (29,590), ASX 200 (7,260), and Hang Seng (19,650) are up between 0.15 and 0.7 per cent.

Moreover, the market breadth of the Nifty 50 is showing bullishness as the advance/decline ratio stands at 40/10 and all the mid- and small-cap indices have gained so far.

Among the sectors, except Nifty Metal and Nifty Pharma, down by 0.3 per cent each, all others are in the green. Nifty Realty, up by 2.9 per cent, is the top gainer.

Nifty 50 futures

The May futures of Nifty 50 index began today’s session lower at 18,300 versus last week’s close of 18,333. However, the contract has now recovered to 18,400. The price action in the hourly chart hints at the breakout of resistance at 18,400.

Also read: F&O Tracker: Derivatives participants bullish on indices

On the upside, the contract has the potential to touch 18,500 today. A breach of this can lift the contract of 18,600. But if the contract starts to fall, it can find support at 18,340 and 18,300.

Trading strategy

Since the likelihood of a rally is high from here, we suggest traders to go long at the current level of 18,400. Add more longs if the price dips to 18,350. Place stop-loss at 18,290. Book profits at 18,500.

Supports: 18,340 and 18,300

Resistance: 18,500 and 18,600

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