Nifty 50 November Futures (17,800)

The Asian markets are looking positive as all major indices except the Hang Seng (down by 1.1 per cent) are in the green. The Nikkei 225 is up 2.6 per cent, ASX has gained 0.6 per cent and the KOSPI is up by 0.4 per cent. Following this, the Indian equity benchmarks i.e., the Nifty 50 and the Sensex witnessed a gap-up open. The Nifty, up by nearly 0.5 per cent, is at 17,750, whereas the Sensex, up by 0.3 per cent, is at 59,500.

The market breadth of the Nifty 50 index is indicates a bullish bias as the advances-declines ratio is at 38-12 and all mid- and small-cap indices have gained so far today. Besides, among the sectoral indices, apart from the Nifty Financial Services index (down by 0.1 per cent), all other indices are in the red. The Nifty Realty, up by 3.8 per cent, and the Nifty Metal, up by 2.7 per cent, are the top gainers. Thus, the buying seems to be broad-based today.

Futures: Similar to the underlying Nifty 50, the November futures of the index opened higher at 17,748 versus yesterday’s close of 17,715. It then rallied to mark a fresh high of 17,855 and is now trading around 17,800. Since the buying looks broad-based and that the Asian markets are positive, the likelihood of the contract staying positive for the day is high and it might touch the nearest resistance at 17,900. A breach of this level can lift the contract to 18,000.

So, traders can go long in Nifty futures at current level of 17,800 and accumulate at 17,760 and place stop-loss at 17,720. Exit half of the positions when the contract reaches 17,900. Thereafter, revise the stop-loss to 17,850 and look for the next target at 18,000. Stick to the stop-loss strictly because the trend over the past couple of weeks has been bearish and so, a breach of 17,720 can trigger considerable sell-off.

Strategy: Buy at current level of 17,800 and go long again at 17,760; keep stop-loss at 17,720. Book partial profit at 17,900, revise stop-loss to 17,850 and wait for the target of 18,000.

Supports: 17,760 and 17,720

Resistances: 17,900 and 18,000