Nifty 50 May futures (11,775)

The benchmark indices -- the Sensex and the Nifty -- began the session in negative territory, but soon entered positive territory in the early hours of trading. However, the indices failed to sustain in positive territory and slipped into the negative.

The benchmark indices are witnessing selling pressure at higher levels. The market breadth of the Nifty index is biased towards declines. The India VIX, which measures market expectations of near-term volatility, has gained 5.3 per cent to 22.9 levels. The Nifty IT index is the major loser, declining by 1.5 per cent.

The Nifty May month contract started the session with a gap-down open at 11,751. After marking an intra-day low at 11,734, the contract bounced up strongly. But it encountered a key resistance at around 11,825 and began to decline. The contract has slipped into negative territory.

Traders should tread with caution as long as the contract trades below 11,800 levels. Consider initiating fresh long positions on a strong rally above 11,800 levels, with a fixed stop-loss. In that case, the contract can test resistance at 11,825 levels. A further rally above 11,825 can take the contract higher to 11,850 levels. The next key resistances are at 11,875 and 11,890. On the downside, a decisive fall below 11,750 can drag the contract down to 11,725 and 11,700 levels.

Strategy: The contract is choppy, tread with caution

Supports: 11,750 and 11,725

Resistances: 11,800 and 11,825

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