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The positive tone set by the Asian equity market is making an impact in the domestic market as the Indian benchmark indices began today’s session with a gap-up. After opening higher compared to yesterday’s close, both Nifty 50 (18,370) and Sensex (61,845) rallied and are up by a little over 0.5 per cent each.
Among the Asian majors, Nikkei 225 (28,424), ASX 200 (7,242), Hang Seng (17,600) and KOSPI (2,438) are up in the range of 0.2–1.1 per cent.
Besides, the market breadth of Nifty 50 is showing a bullish bias as the advance-decline ratio stands at 44/5. Also, the mid- and small-cap indices are in the green.
Coming to the sectors, barring Nifty Metal and Realty, down by nearly 0.2 per cent each, all others are up today so far. The Nifty PSU Bank and IT are the top performers as they have gained 1.1 and 0.9 per cent, respectively.
The above factors give a bullish inclination. However, today is the expiry of November contracts and so we may see increased volatility, especially in the second half of today’s session.
Nifty 50 futures
The November futures of the Nifty 50 index opened the day higher at 18,310 versus yesterday’s close of 18,287. It surpassed the hurdle at 18,300 and is now trading at 18,365.
While the factors discussed above and the intraday price action so far hints at further rally, the option chain of Nifty 50 (November expiry) shows substantial writing of 18,300 put option and 18,400 call option, which can act as support and resistance, respectively. This also suggests that the contract could remain within 18,300 and 18,400 till the end of the day.
That said, a breakout of 18,400 can trigger a quick rally to 18,500.
Trading strategy
Do not execute fresh trades at the current level. Initiate fresh longs if the Nifty futures (November series) rallies past 18,400. Place stop-loss at 18,350 and exit when the contract touches 18,500.
Supports: 18,300 and 18,225
Resistance: 18,400 and 18,500
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