Nifty Call: Go short only on a decisive fall below 10,850 levels

Nifty 50 May Futures (10,870)

The bellwether indices, the Nifty and the Sensex, started the session in a positive territory and rose sharply taking cues from the Karnataka Assembly elections in which BJP is leading in over 112 seats.

However, both the indices began to face resistances at the day's high and started to decline due to profit-taking. The market breadth of the Nifty index is biased towards advances. The volatility index, India VIX has plunged more than 10 per cent to 12.73 levels.

The Nifty futures contract started the session on a flat note at 10,814 and surged beyond the key resistance level of 10,900. But, after marking an intra-day high at 10,947, the contract began to give away its gains on the back of profit-taking as well as selling pressure witnessed at higher levels. The contract has slipped below 10,900 and is hovering at 10,880.

Traders with a short-term perspective can go short if the contract declines further below 10,850 levels with a fixed stop-loss. In that case, the contract can slip to 10,825 and 10,800 levels. Next key supports are at 10,775 and 10,750 levels.

On the upside, a strong rally above 10,900 is needed to bring back the bullish momentum to take the contract northwards to 10,930 and 10,950 levels.

Strategy: Go short only on a decisive fall below 10,850 levels with a tight stop-loss

Supports: 10,850 and 10,825

Resistances: 10,900 and 10,930

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