Nifty 50 October Futures (17,470): Oct 1

BL Research Bureau

Sellers seem to be dominating the trading floors across Asia as the major equity indices in this region are in the red since morning. Among the majors, the Nikkei 225 is down by 2.3 per cent, ASX 200 has lost 2 per cent and KOSPI is trading lower by 1.6 per cent compared to yesterday’s close.

The Indian benchmarks certainly have taken cues from this and began today’s session on the downside. While the Nifty 50 at 17,480 is down by 0.75 per cent, the Sensex, at 58,630 has lost 0.85 per cent so far today.

The market breadth of the Nifty 50 sends out bearish signal as the advance-decline ratio is at 17-33. Like the benchmark indices, all the mid- and small-cap indices are down, losing between 0.1 and 0.5 per cent. Besides, most of the sectoral indices too have been moving down, indicating a broader sell-off. This hints that the decline may not be over yet for today.

Futures: The October futures of the Nifty 50 opened at 17,523 i.e., 100 points lower compared to yesterday’s close. But since open, the contract has not really faced significant sell-off and in fact, it is now fluctuating within 17,450 and 17,530. However, considering that the contract has been on a decline for the past few trading sessions and that the sell-off today seems to be broad-based, the probability of it slipping below 17,450 is higher.

Considering the above factor, traders can initiate sell at the current level of 17,470 and can short further if it rallies to 17,500. Place stop-loss at 17,550. The futures is likely to decline below 17,450 and touch 17,375 – the immediate support. A breach of this level can drag the contract to 17,315, a key support.

On the other hand, a breakout of 17,530 can turn the intraday trend positive wherein the contract can rise to 17,600.

Strategy: Initiate short positions at current level of 17,470 and at 17,500. Stop-loss at 17,550

Supports: 17,450 and 17,375

Resistances: 17,530 and 17,600