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Nifty 50 October Futures (18,155)
Even as the Asian markets are mixed since morning, the Indian equity benchmarks, began the session with a gap-up. However, both indices have given up some of the gains and currently, the Nifty 50 is at 18,145 (up by 0.15 per cent) and the Sensex is at 61,030 (up by 0.34 per cent). Among the Asian majors, the Nikkei 225 is down by 0.65 per cent whereas the ASX 200 has gained 0.35 per cent; the Hang Seng is flat for the day so far.
Although the Nifty 50 is trading slightly in the green, the advance-decline ratio of the index is showing bearish bias as it stands at 14-36. All the mid- and small-cap indices are in the red, losing between 1.7 and 2.2 per cent. Sectoral indices show that banking and financial services indices are the gainers along with metals whereas all other indices are in the red. The Nifty Bank and Private bank index are the top gainers, up by nearly 2.3 per cent each. The Nifty Realty is the top loser, down by 2.2 per cent followed by the Nifty IT, down by 2.1 per cent.
Futures: Like the underlying Nifty 50, the October futures of the index opened the session with a gap-up at 18,220 versus last week’s close of 18,144. However, it immediately started falling and marked an intraday low of 17,986. But the contract regained some strength and recovered to take itself above 18,000 and 18,100. It is currently trading around 18,155.
While the past few sessions for the contract have been bearish, it has today bounced off the 21-day moving average at 17,980. This along with that 18,000 can act as a strong support band and until these levels hold, the trend will be bullish biased. Also, from the current level of 18,155, the nearest support can be spotted at 18,085. But for the recovery to sustain, the contract should breach 18,200.
So, traders can go long if the contract breaches the nearest resistance at 18,200 with stop-loss at 18,150. Above 18,200, it will most likely rally to 18,300 with a pause at 18,250. So, the target for the longs can be 18,300. When the contract crosses over 18,250, shift the stop-loss to 18,200.
Strategy: Buy the contract when it breaches the resistance at 18,200 for a target of 18,300.
Initial stop-loss at 18,150 and shift it to 18,200 if the contract goes above 18,250
Supports: 18,100 and 18,085
Resistances: 18,200 and 18,250