Following the bearish cues from the Asian equity markets, the Indian benchmarks began the session on the weak foot. Post opening both Nifty 50 and Sensex slid and are now at 17,325 and 58,025, respectively. Thus, both the indices have lost over 1 per cent. Among the Asian majors, Nikkei 225 is down by three-fourth of a per cent whereas Hang Seng and KOSPI are down by 0.4 per cent each.

The market breadth of the Nifty is showing a bearish inclination as the advance-decline ratio stands at 17-33 now. Like the benchmark indices, all mid- and small-cap indices have lost between 0.4 and 1.4 per cent. Barring the Nifty Metal (up by 1.2 per cent) and the Nifty FMCG (up by 0.1 per cent), all other sectoral indices are in the red. The Nifty Realty and Media are the top losers, down by 2.8 and 1.9 per cent, respectively.

Futures

Following the underlying Nifty 50’s bearish beginning, the February futures of the index opened with a gap-down at 17,458 versus Friday’s close of 17,529. Though it made an intraday high of 15,532 soon after opening, the contract reversed the direction, and it is now hovering around 17,320.

The trend is bearish and therefore, the contract will most likely drop to the nearest support at 17,250. A breach of this level can drag it to 17,100. On the other hand, the resistance at 17,380 and 17,420 is expected to cap the upside.

Given the above factors, traders can short at current levels (17,320) and short more if the contract rallies to 17,380. Place initial stop-loss at 17,440. When the contract falls to 17,250, revise the stop-loss to 17,360. Liquidate the shorts when the contract drops to 17,100.

Strategy

Sell at current level of 17,320 and add shorts at 17,380 with initial stop-loss at 17,440. Revise the stop-loss to 17,360 when the contract drops to 17,250. Exit the shorts on a fall to 17,100.

Supports: 17,250 and 17,100

Resistances: 17,380 and 17,420

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