The Nifty call: Make use of intra-day rallies to initiate fresh short positions

Nifty 50 August Futures (9,903)

The Nifty and the Sensex extended their declines and opened in the red taking cues from the negative US and Asian markets. The Nifty futures contract also opened in negative territory with a gap down at 9,895. Subsequently, the contract extended its decline and marked an intra-day low of 9,864. But after taking support at this low, the contract began to recover and rallied to record an intra-day high of 9,919 levels. This corrective upmove has failed to sustain further and the contract once again started to decline. The underlying Nifty index is experiencing selling pressure at higher levels. The market breadth of the index is biased towards declines. The near-term outlook remains bearish as long as the contract trades below the key resistance level of 9,925 levels. Traders with a near-term perspective can consider selling the contract in intra-day rallies while maintaining a fixed stop-loss at 9,925 levels. The contract can continue its downtrend and test supports at 9,865 and 9,850 levels. Further decline below 9,850 can drag the contract down to 9,825 and 9,800 levels in the short term. Key resistances are placed at 9,925 and 9,950 levels. The contract needs to rally beyond 9,925 levels to bring back bullish momentum and take the contract higher to 9,950 levels.

Strategy: Make use of intra-day rallies to initiate fresh short positions with a tight stop-loss at 9,925 levels.

Supports: 9,865 and 9,850

Resistances: 9,925 and 9,950

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