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The Indian benchmark indices are trading stable. After a strong sell-off on Monday, both the Sensex and Nifty 50 are trading slightly higher. Sensex trading at 56,752 is up 0.61 per cent.
Nifty on the other hand is up 0.6 per cent and is trading at 16,943. However, the broader view is still negative. Sensex will have to rise past 57,500 to ease the downside pressure and see a rise to 59,000 levels again. Else, it will continue to remain vulnerable to test 56,000 and break below it in the coming days.
Nifty has good support in the 16,850-16,800 region which is holding as of now. At the same time strong resistance is in the 17,100-17,200 region which can cap the upside. The bias is bearish to break below 16,800 and see a fall to 16,600 in the coming sessions.
In US, the Dow Jones Industrial Average extended the fall by another 0.49 per cent yesterday. The index has closed at 34,566.17 and can test 34,000 in the coming days. It is important to see if the Dow is managing to hold above 34,000 or not.
In Asia, barring the Shanghai Composite (3,435.35, up 0.19 per cent), other major indices are trading in red. Nikkei 225 (26,801), Hang Seng (24,274) and Kospi (2,667) are all down over a per cent today.
Futures
The Nifty 50 February (16,953) Futures contract is up 0.68 per cent today. However, resistance is in the 17,050-17,100 region which is likely to cap the upside. We can expect the contract to reverse lower again and remain under pressure. While below 17,100, the chances are high for the Nifty 50 Futures contract to revisit 16,800 levels again. It will also keep the contract vulnerable to break below 16.800 and fall to 16,600.
Traders can wait for a rise and initiate fresh short positions at 17,030. Accumulate shorts at 17,080. Keep the stop-loss at 17,170. Trail the stop-loss down to 16,980 as soon as the contract falls to 16,910. Move the stop-loss further down to 16,880 as soon as the contract touches 16.840. Book profits at 16,820.
The contract will have to rise past 17,100 decisively in order to negate the above-mentioned fall. But such a strong rise looks less probable at the moment.
Trade Strategy: Go short on a rise at 17,030 and 17,080. Keep the stop-loss at 17,170 for the target of 16,820. Trail the stop-loss down to 16,980 as soon as the contract falls to 16,910. Move the stop-loss further down to 16,880 as soon as the contract touches 16.840.
Supports: 17,800 and 17,600
Resistances: 17,050 and 17,100
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