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Nifty 50 February Futures (17,580)
The Indian benchmark indices has seen a sharp fall in line with our expectation. Nifty has tested 17,500 and Sensex has touched 58,500. Both the indices are attempting for a bounce now. Sensex is trading at 58,747 and Nifty is at 17,552, both marginally down for the day.
High chances for getting fresh sellers at higher levels. 59,000 on the Sensex and 17,620-17,650 on the Nifty are key hurdles that can cap the upside. As long as the indices trade below these resistances, the outlook is negative to 58,000 on the Sensex and 17,400-17,200 on the Nifty. As such the strategy will be to sell on rallies rather than buying at current levels or on dips.
The major indices in Asia are trading sharply higher. Hang Seng (24,531) has surged over 3 per cent. Kospi (2,745) is up 1.37 per cent and Nikkei 225 (27,430) is up 0.7 per cent. China is closed on account of public holiday. The Chinese market will reopen next week.
In the US, the Dow Jones Industrial Average (35,111,16) had declined sharply by 1.45 per cent and snapped the four-day strong rally. It will have to be seen if the index can bounce-back today above 35,500 or not.
Inability to rise past 35,500 from here will negate the view of seeing 36,000-37,000 on the upside that we have been expecting. In turn, that will drag the index down to 34,000 again in the coming sessions. The US jobs data release today will be key in determining the direction of move for the Dow from here.
Futures: The Nifty 50 February Futures (17,580) is attempting to bounce-back after testing 17,500 on the downside. But resistance could be at 17,650. As long as the contract trades below 17,650, the chances are high for it to break 17,500 and see a fall to 17,400-17,200 in the coming sessions.
A break below 17,500 can trigger this fall. Traders can go short on a break below 17,500. Keep the stop-loss at 17,580. Trail the stop-loss down to 17,480 as soon as the contract moves down to 17,420. Move the stop-loss further down to 17,430 as soon as the contract touches 17,370. Book profits at 17,320.
The contract can gain bullish momentum only if it breaks above 17,650 decisively. Such a break can take the contract up to 17,800 levels again.
Trade strategy: Go short on a break below 17,500 with a stop-loss at 17,580 for the target of 17,320. Trail the stop-loss down to 17,480 as soon as the contract moves down to 17,420. Move the stop-loss further down to 17,430 as soon as the contract touches 17,370.
Supports: 17,500 and 17,400
Resistances: 17,650 and 17,800
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