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Domestic equity benchmarks opened with a positive bias for the second consecutive day on Wednesday.
While there could be a minor decline, the Nifty 50 (17,560) and the Sensex (59,230) are likely to go up further.
Supporting the bull trend, the major Asian stock indices are trading in green. Nikkei 225, ASX 200 and KOSPI are up between 0.15 and 0.6 per cent. On the other hand, Hang Seng was down by 1 per cent.
The market breadth of the Nifty 50 is also bullish as the advance/decline ratio is at 33/17. All the mid- and small-cap indices, too, have gained today.
Among the sectoral indices, the Nifty Financial services is the top gainer, up by 0.9 per cent, while the Nifty Media is the worst performer, down by 0.4 per cent.
Not withstanding the performance of other indices, Nifty 50 is likely to extend the rally from the current level and this gives us intraday opportunity in Nifty futures.
Nifty 50 futures
The October futures of the Nifty 50 index opened today’s session higher at 17,535 against yesterday’s close of 17,502. At the time of filing this report, it was trading at 17,555 and the chart indicates that the contract will most likely rally from the current level.
The nearest hurdle is seen at 17,630 with the next one at 17,700. These levels can be reached by the Nifty futures intraday. Nevertheless, one needs to take risk management measures once the Nifty futures touch 17,630 as there is a slim chance for it to see a minor dip that can eat into intraday profits.
Trading strategy
Go long on Nifty futures at the current level of 17,555. Add more longs in case there is a dip to 17,500. Place stop-loss at 17,430.
Consider exiting half of your positions once the contract rallies to 17,630 and tighten the stop-loss to 17,575. Exit the remaining at 17,700.
Alternatively, one can buy a put option as a hedge when Nifty futures touches 17,630. One can probably buy 17600-strike put. But exit both the positions at the end of the day.
Supports: 17,500 and 17,430
Resistance: 17,630 and 17,700
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