Technical Analysis

Nifty 50 January Futures (14,325)

Akhil Nallamuthu BL Research Bureau | Updated on January 18, 2021

Initiate short positions below 14,290

As most of the Asian equity indices are trading in the red, the Indian benchmark indices too followed suit. Among the major Asian peers, the early riser ASX 200 ended the session with 0.8 per cent loss whereas the Nikkei 225 is down by nearly 1 per cent. As an exception, the Hang Seng index has gained about 0.7 per cent.

But since the overall sentiment today has been tilted to negative, despite a minor gap-up open, both the Nifty 50 and the Sensex declined and are currently trading lower by 0.9 per cent and 0.8 per cent, respectively, compared to Friday’s closing level.

The bearish bias can be observed in the market breadth of the Nifty 50 index as the advance-decline ratio stands at 11-39. Also, the volatility has gone up, something that is synonymous with a bearish trend.

Similar to the benchmark indices, the mid- and small-cap indices have lost between 1.5 and 2.3 per cent. Moreover, barring the Nifty FMCG index (up by 0.2 per cent), all other sectoral indices have witnessed a decline today so far. The Nifty metal index is the top loser, down by 3.4 per cent followed by the Nifty realty index, down by 2.8 per cent.

Coming to the futures of the Nifty 50 index, the January series contract opened flat at 14,458. But the contract started to fall right from the beginning of the session and currently, it is trading around 14,325 after registering a low of 14,283. In the past couple of hours, the contract has largely been trading between 14,290 and 14,350. Considering this, even though the trend is bearish, traders can wait for the breach of the support at 14,290 before initiating fresh short positions. That is, short the contract with a stop-loss at 14,350 if it decisively breaks below 14,290.

Strategy: Initiate short positions below 14,290; stop-loss can be at 14,350

Supports: 14,290 and 14,240

Resistances: 14,350 and 14,385

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Published on January 18, 2021
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