Following a gap up open at 10,809, the Nifty February month futures contract began to decline due to selling pressure.

The contract breached a key support at 10,700 and recorded an intra-day low at 10,670 levels. Both the Sensex and the Nifty also began to decline after a positive start. The market breadth of the Nifty index is biased towards declines.

The India VIX has surged 7.3 per cent to 17.65 levels. The Nifty mid- and small-cap indices are also featuring in red, witnessing selling pressure. However, the Nifty futures contract has been on a recovery phase since recording an intra-day low at 10,670 and has moved above the key level of 10,700. Next key resistances are at 10,730 and 10,750 levels.

Traders with a near-term view can consider taking a contrarian view and initiate fresh long positions on a strong rally above 10,730 levels with a fixed stop-loss. Significant resistances above 10,750 are placed at 10,775 and 10,800 levels. On the other hand, a decisive fall below the vital base level of 10,670 will drag the contract down to 10,650 and then to 10,625 levels.

Strategy: Fresh long positions are recommended on a decisive rally above 10,730 levels with a fixed stop-loss.

Supports: 10,670 and 10,650

Resistances: 10,730 and 10,750

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