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Nifty 50 January futures (17,745)
The Nifty 50 and Sensex, which gained by about 1.6 per cent each on Monday, continued their positive momentum as both began today’s session with a gap-up open. Both the domestic benchmark indices rallied post the open. Currently, the Nifty is at 17,710 (up by 0.5 per cent) and the Sensex at 59,500 (up by 0.6 per cent).
The Asian markets seem to be sending out bullish signals as major indices such as the ASX 200 (up by nearly 2 per cent), Nikkei 225 (up by 1.8 per cent) and Hang Seng (up by 0.15 per cent) are in the green.
The market breadth of the Nifty 50 is showing a bullish inclination as the advances-declines ratio now stands at 34-16. All the mid- and small-cap indices, too, are in the green, gaining between 0.2 and 0.7 per cent. Also, most of the sectoral indices are up. These are indications of broad-based buying and, thus, today could be another day that is dominated by bulls. Among the sectoral indices, the Nifty PSU Bank and the Nifty Bank index are the top performers, up by 1.6 and 1.1 per cent, respectively.
Futures: The January futures of the Nifty opened the session with a gap-up at 17,730 versus yesterday’s close of 17,678. It then rallied to mark an intra-day high of 17,775 and has now softened to 17,745. As it stands, the contract is well above the key level of 17,700, which has the potential to define the short-term trend. In that sense, a daily close above this level is necessary for us to assume that the trend has turned positive.
Since today’s rally is broad-based, the positive sentiment across Asian markets allows us to take risks with longs. That is, traders can buy Nifty futures at the current level of around 17,745, and add more when it drops to 17,700. Place stop-loss at 17,625 – the immediate support below 17,700.
On the upside, the nearest resistance from the current level is at 17,830. Subsequent resistances are at 17,950 and 18,000. Thus, when the contract reaches 17,830, shift the stop-loss from 17,625 to 17,750. Liquidate the longs when the price touches 17,950.
Strategy: Go long now and add longs when the price softens to 17,700. Place the initial stop-loss at 17,625 and revise it to 17,750 when the contract touches 17,830. Exit longs at 17,950.
Supports: 17,700 and 17,625
Resistances: 17,830 and 17,950
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