BL Research Bureau
Nifty 50 April Futures (14,535)
Among the major equity market indices in Asia, the Nikkei 225 is up by nearly 0.9 per cent, whereas the KOSPI index is up by one-third of a per cent so far. Other majors like ASX 200 and the Hang Seng are closed on account of a bank holiday.
But despite the positive cues from the Asian market, the Indian benchmark indices opened with a gap-down and has been declining since then. The Nifty 50 and the Sensex are down by 2.6 and 2.8 per cent, respectively.
The market breadth of the Nifty 50 is indicating a strong downtrend as the advance-decline ratio currently stands at 5-45. Volatility has gone up significantly because of the sell-off i.e., India VIX – the volatility index – has shot up by nearly 16 per cent to 23.10, which is synonymous with the bear trend.
The mid-and small-cap indices, too, have been facing considerable selling pressure since the beginning of the session. They are down between 2.5 and 3.5 per cent. Among the sectoral indices, except the Nifty IT index (up by 0.3 per cent), all other indices are down, with the top loser being the Nifty PSU bank index, down by 5.3 per cent. This is followed by the Nifty media index, down by 5 per cent.
Futures: The April futures contract, like the underlying Nifty 50 index, opened the session with a gap-down at 14,890 versus the preceding session’s close of 14,953. It has been declining sharply since then and is currently trading around 14,535. The market breadth and sectoral indices show that the sell-off is broad-based, and the contract will most likely decline further. But since the market is witnessing high volatility, the intraday positions demand higher stop-loss levels, which might not be suitable for all traders.
So, traders with a higher risk appetite can initiate a fresh short position on rallies with stop-loss at 14,660. From the current level of 14,535, the nearest support is 14,500. But this might be broken easily given the downward momentum. Support below 14,500 can be seen at 14,450 and 14,400. The closest resistance levels are at 14,600 and 14,660.
Strategy: Sell the contract on intraday rallies with a stop-loss at 14,660
Supports: 14,500 and 14,450
Resistances: 14,600 and 14,660