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Nifty 50 February Futures (17,215)
Sensex and Nifty 50 fell sharply in the initial trades. However, the indices have recovered back well from their intraday lows. Sensex and Nifty made an intraday low of 57,167 and 17,071, respectively and bounced back sharply. Sensex is now trading at 57,614 (down 0.38 per cent) and Nifty is at 17,202 (down 0.43 per cent). The first support levels of 57,000 on the Sensex and 17,000 on Nifty are holding well. However, it is important to see whether the indices are getting a strong follow-through rise going forward. Nifty has to rise past 17,250 to move up to 17,400 levels again. On the other hand, Sensex has resistances at 57,800 and 58,000 which will have to be broken to see 59,000 levels on the upside. Overall the picture is not very bullish at the moment, and one has to remain cautious as a reversal is possible anytime.
Most of the Asian indices are under pressure and trading in the red. Nikkei 225 (26,928), Shanghai Composite (3,485), Hang Seng (24,188) and Kospi (2,740) are all down in the range of 0.15-0.7 per cent.
The Dow Jones Industrial Average (34,079) was also down on Friday in the US. It is important to see if the Dow manages to hold above 34,000 or not. A break below 34,000 will be bearish to see 33,000 on the downside. The US markets are closed today.
Futures: The Nifty 50 February (17,215) Futures contract has risen back well from its low of 17,081. If it sustain above 17,200, a further rise to 17,300-17,350 is possible today. But a further rise past 17,350 could be difficult as strong resistance is there in the 17,300-17,350 region. We expect the Nifty 50 February futures contract to reverse lower from the 17,300-17,350 resistance region and fall back to 17,100 again. As such, traders can wait for a rise and go short at 17,310 and accumulate at 17,340. Keep the stop-loss at 17,420. Trail the stop-loss down to 17,290 as soon as the contract falls to 17,180. Move the stop-loss further down to 17,170 as soon as the contract touches 17,110. Book profits at 17,070.
The Nifty 50 Futures contract will have to rise past 17,400 decisively to become bullish and negate a fall back to 17,000 levels. Such a rise above 17,400 if seen can take the contract up to 17,600 and even higher levels in the coming days. But that looks less probable as the broader sentiment in the market is highly risk-averse on the back of the ongoing geopolitical tensions between Russia and Ukraine.
Trade Strategy: Go short on a rise at 17,310 and 17,340 with a stop-loss at 17,420 for the target of 17,070. Trail the stop-loss down to 17,290 as soon as the contract falls to 17,180. Move the stop-loss further down to 17,170 as soon as the contract touches 17,110
Supports: 17,000 and 16,800
Resistances: 17,350 and 17,400
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