Nifty 50 January Futures (12,286)

The Indian benchmarks -- the Nifty spot and the Sensex spot index are trading marginally lower in today’s session. The major Asian indices are giving mixed signals as Nikkei has closed lower by nearly 0.8 per cent whereas the Hang Seng index is up by 0.8 per cent.

Following the spot index, the January futures contract of the Nifty 50 index too is trading lower. The contract opened the session at 12,326 versus its previous close of 12,319; after making an intraday high of 12,348, the contract started to decline as 12,350 is a critical resistance level.

The market breadth of the Nifty 50 index is almost flat with 27 out of the 50 stocks trading in the green. But the index seems to be witnessing high volatility as indicated by India VIX – the volatility index. It has shot up nearly 7 per cent today to 11.2 levels. Among the sectoral indices, the Nifty auto index is the top performer, up by 0.6 per cent whereas the Nifty PSU bank index is the top loser, down by 1.75 per cent so far in today’s session.

Even though the December futures contract of the Nifty 50 index is in an uptrend, it faces a critical resistance at 12,350 levels. Thus, the contract should break out of that level to continue the uptrend and so fresh long positions are not recommended at current levels. Since the risk-reward ratio is favourable for short positions, traders with higher risk appetite can initiate fresh short positions on intraday rallies with stop loss at 12,360.

Strategy : Initiate short positions on rallies with stop loss at 12,360

Supports: 12,250 and 12,230

Resistances: 12,350 and 12,390

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