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Even though most of the equity markets across Asia are struggling to rally and facing selling pressure, the domestic market appears positive as the benchmark indices – Nifty 50 and Sensex – began today’s session with a gap-up.
However, both the indices gave up all the gains. Currently Nifty 50 (18,470) and Sensex (62,200) are trading lower by 0.1 per cent compared to yesterday’s closing price.
Among the Asian majors, Nikkei 225 (28,280), Hang Seng (17,520) and KOSPI (2,440) are down between 0.1 and 0.8 per cent. But ASX 200 (7,255) is up by one-fourth of a per cent.
Looking at the broader performance of the domestic market, one can be optimistic as the mid- and small-cap indices have gained. For instance, Midcap 50 is up by 0.8 per cent whereas Smallcap 50 is up by 0.9 per cent so far today.
Besides, among the sectoral indices, most of them have either gained or are trading flat now. Therefore, the bears, who dragged Nifty 50 and Sensex post opening today may not be strong enough to keep the intraday trend bearish.
Nifty 50 futures
The December futures of the Nifty 50 index opened the day slightly higher at 18,631 versus yesterday’s close of 18,626. While it marked an intraday high of 18,651, the contract has now dropped to 18,600.
Although there is a chance for the price to move down further, the contract is likely to find good support at 18,570. Subsequent support is at 18,500. Yet, a decline below 18,570 today is less probable.
We expect the contract to recover from the current level of 18,600 or rally after softening to 18,570. The Nifty December futures has the potential to rally to 18,700 and then to 18,800. Therefore, traders can consider buying the contract for intraday.
Trading strategy
Buy Nifty futures now i.e., around 18,600. Add more longs when price dips to 18,570. Stop-loss for this position can be at 18,500.
When the contract crosses over 18,650, modify the stop-loss to 18,550. On a rally past 18,700, tighten the stop-loss to 18,600. Exit the longs at 18,800.
Supports: 18,570 and 18,500
Resistance: 18,700 and 18,800
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