Nifty call: Initiate short on rallies with stop loss at 12,310

BL Research Bureau

Nifty 50 December Futures (12,270)

The Indian benchmarks are trading slightly on the downside. The Nifty and the Sensex spot indices are down by 0.1 per cent each. The Nikkei index looks subdued and is trading flat, but the Hang Seng index is trading lower by 0.15 per cent.

The December futures contract of the Nifty 50 index opened marginally lower at 12,259 against its previous close of 12,276. After registering an intraday high of 12,314, the contract is currently trading at 12,270. Though the price action looks sluggish, it is trading with a negative bias. Unless the contract closes above 12,300 daily, a rally from the current level is less likely.

Looking at the market breadth, it is inclined towards the bulls, as the advance-decline ratio is at 30-20. The market seems to witness low volatility as India VIX-the volatility index, is down by nearly 3 per cent to 11.62 levels. Among the sectoral indices, the Nifty metal index is the top gainer, up by 0.7 per cent. In contrast, the Nifty IT index is the top loser, down by 0.6 per cent.

Factors suggesting bullish bias are many stocks advancing as per market breadth and lower level of volatility. However, the contract faces a strong resistance between 12,290 and 12,300; also, the Relative Strength Index (RSI) in the daily chart is showing signs of a trend reversal. Thus, traders are recommended to initiate short positions on rallies with stop loss at 12,310

Strategy: Initiate short positions on rallies with stop loss at 12,310

Supports: 12,230 and 12,210

Resistances: 12,290 and 12,314

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