The Indian benchmark indices opened the day marginally higher on Wednesday and has moved up in the morning session. The Nifty 50 at 16,615 and the Sensex at 55,690 is up by 0.20 and 0.25 per cent, respectively. The Asian indices look mixed—Nikkei 225 and ASX 200 are up 0.7 and 0.25 per cent, respectively whereas Hang Seng is down 0.7 per cent till the time of publishing this report. Nevertheless, the overall bias seems positive.

Despite the Nifty 50 trading in the green, the market breadth of the index is indicating a bearish bias i.e., the advance/decline ratio stands at 18/32. However, the mid- and small-cap indices are positive.

The Midcap 50 and the Smallcap 50 have gained 0.6 and 0.9 per cent, respectively. The Nifty Metal, up about 1 per cent, is the top gainer among the sectoral indices. The Nifty Realty is the top loser, down 0.5 per cent.

Futures: Unlike the underlying Nifty 50, the June futures opened today’s session lower at 16,550 compared to yesterday’s close of 16,578. The contract then rallied to hit an intraday high of 16,640 and has now softened to 16,580.

Nifty futures now seem to be fluctuating in the range of 16,540–16,700. Therefore, a breach of this range will give us an indication on the next swing in price.

A breakout of 16,700 can lift the contract up to 16,800 and then possibly to 17,000 in the next few sessions. On the other hand, if the contract slips below the support at 16,540, it can result in the resumption of the next leg of downtrend. Immediate support below 16,540 is at 16,400. There is another support at 16,360. Subsequent support is at 16,200.

Given the prevailing conditions, traders can stay on the fence. Consider initiating fresh positions along the direction of the break of the 16,540–16,700 range.

Strategy: Stay on the fence for now and consider initiating fresh positions along the direction of the break of the 16,540–16,700 range.

Supports: 16,540 and 16,400

Resistances: 16,700 and 17,000

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