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The Sensex and the Nifty 50 commenced the session with a large gap-down open, taking bearish cues from the US and Asian markets. Last session, the US indices, the Dow Jones and S&P 500 had nose-dived 6.3 per cent and 5.2 per cent respectively. The Nikkei 225 has slumped 1 per cent to 16.552 levels and Hang Seng has tumbled 2 per cent to 21,834 in today's session.
After an initial decline, both the Sensex and the Nifty 50 have begun to recover from their intra-day low and have trimmed their intra-day losses to 2 per cent and 2.4 per cent respectively. The market breadth of the Nifty continues to be biased towards declines. The volatility index, India VIX has skyrocketed 13.3 per cent to 72.4 levels. Witnessing selling interest the Nifty mid-cap index has fallen 3 per cent and the Nifty small-cap index has plummeted about 5 per cent. Barring the Nifty PSU Bank index which has gained 1.2 per cent, all the other secotral indices are trading in the negative territory. The Nifty Auto and the Nifty realty indices are the top losers which have slumped 4.4 per cent and 4.2 per cent correspondingly.
After a large-gap down open at 8,111 the Nifty March month futures contract extended the decline and marked an intra-day low at 7,816. Thereafter the contract bounced back due to short-covering and buying interest witnessed in the PSU Banks. The contract breached key resistances at 8,000 and 8,200 levels. The contract surpassed the next vital resistance at 8,300 levels now. Traders can consider initiating fresh long positions in declines as long as the contract trades above 8,300 levels with a fixed stop-loss. A strong rally above 8,300 can take the contract higher to 8,370 and then to 8,400 levels. Subsequent resistances are at 8,450 and 8,500. On the other hand, supports are at 8,250 and 8,200. A strong fall below 8,200 can pull the contract down to 8,100 levels.
Strategy: Buy in dips as long as the contract trades above 8,300 levels with a fixed stop-loss
Supports: 8,250 and 8,200
Resistances: 8,370 and 8,400
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