Nifty call: Go long on strong rally above 14,400 levels

Nifty 50 January futures (14,396)

The Sensex and Nifty 50 began the session with a gap-up open, taking positive cues from the Asian markets but turned volatile thereafter. The Nikkei 225 has climbed 0.67 per cent 28,822.3 and the Hang Seng index has advanced 2.15 per cent to 30,080 in today's sessions.

Both the Sensex and the Nifty 50 slipped into negative territory and turned choppy, wavering between positive and negative zone. Both the indices are trading almost flat. However, the market breath of the Nifty 50 is biased towards advances. The India VIX has jumped 4.7 per cent to 23.47 per cent.

Witnessing selling interest the Nifty mid and small-cap indices have fallen 0.2 per cent and 0.6 per cent respectively. The top sectoral gainers are Nifty pharma and Nifty Bank that have advanced 1.6 per cent and 1.05 per cent respectively. The Nifty IT sectoral index is the top loser that has slumped 0.6 per cent.

The January month futures contract of the Nifty 50 commenced the session with a gap-up open at 14,475. After recording an intraday high at 14,497, the contract began to decline and slipped below the key base level of 14,300 to mark an intraday low of 14,266. But, the contract had recovered from this low and is currently moving sideways in a narrow range. The key resistance at 14,400 is limiting the upside now.

Traders should tread with caution as long as the contract trades below 14,400 levels. A strong breach of the level can push the contract higher to 14,430 and then to 14,450. In that case, traders can initiate fresh long positions with a fixed stop-loss. On the other hand, a decline below the immediate support level of 14,340 can pull the contract down to 14,320 and 14,300 levels. Next key supports below 14,300 are placed at 14,270 and 14,250. Resistances above 14,450 are at 14,475 and 14,500 levels.

Strategy: The contract is range-bound. Go long on a strong rally above 14,400 levels

Supports: 14,340 and 14,320

Resistances: 14,400 and 14,430