Nifty call: Go short on decisive fall below 10,300 levels, with fixed stop-loss

Nifty 50 October Futures (10,317) Following a positive start, the Sensex and the Nifty index slipped into negative territory in early trading. Subsequent up-moves have failed to take the benchmark indices above the key resistance levels.

The market breadth of the Nifty is biased towards declines. Both the mid- and small-cap indices have tumbled about 1.4 per cent. The strong decline of 3 per cent in the Nifty Auto and 2.2 per cent fall in the Nifty FMCG index are dragging the broader markets.

The Nifty October futures contract opened the session on a positive note at 10,389. After an initial rally to the intra-day high of 10,415, the contract resumed its down-move and declined below 10,400 levels. Extending the downtrend, the contract breached key support at 10,350 and found support at 10,300, which is the day's low. However, the contract has bounced back marginally from its intra-day low.

Traders should tread with caution as long as the contract is range-bound between 10,300 and 10,350. A strong fall below 10,300 will be the cue to initiate fresh short positions, with a fixed stop-loss. Key supports below 10,300 are at 10,270 and 10,250 levels. On the other hand, a decisive rally above 10,370 is needed to bring back the bullish momentum and take the contract higher to 10,400 and 10,420 levels.

Strategy: Go short on a decisive fall below 10,300 levels, with a fixed stop-loss

Supports: 10,300 and 10,270

Resistances: 10,350 and 10,370

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