The Indian benchmark indices – the Nifty 50 (18,130) and the Sensex (60,850) – opened the day’s session with a gap-up. However, both gave up all the gains and are trading down by nearly 0.4 per cent each.

This is despite the major Asian indices trading in the green. Among them, Nikkei 225 (26,510), ASX 200 (7,150), Hang Seng (19,650) and KOSPI (2,350) are up between 0.5 and 2.6 per cent.

As the domestic indices fell, the bearish signs are becoming stronger. Currently, the advance/decline ratio of Nifty 50, at 6/44, is showing the majority of the stocks in the index are in the red today. All the mid- and small-cap indices and all the sectoral indices too have lost, indicating a broad-based sell-off today. India VIX – the volatility index – has also risen by a little over 4 per cent to 16.20, adding to the bearishness in the market.

Nifty 50 futures

The Nifty 50 index’s December futures opened higher today at 18,327 versus yesterday’s close of 18,276. However, it made a U-turn and has now fallen to the current level of 18,170.

The hourly chart shows that the contract has formed a lower low today and the price action hints at further downside from the current level.

While the nearest support is at 18,130, given the current downward momentum, the Nifty futures could drop to 18,000. On the upside, 18,250 will be a strong barrier.

Trading strategy

Traders can consider going short at the current level of 18,170. Add more shorts when the price rallies to 18,220. Place stop-loss at 18,280.

When the contract falls below 18,130, move the stop-loss down to 18,220. On a fall below 18,080, tighten the stop-loss further to 18,160. Exit the shorts at 18,000.

Note that this is an intraday trade recommendation. So, exit the position by the end of the day if either target or stop-loss levels are not hit.

Supports: 18,130 and 18,000

Resistance: 18,250 and 18,300

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