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The Indian benchmark indices have opened the week on a weak note. Both the Sensex and Nifty 50 have declined sharply today and are down over 1 per cent each. Nifty has broken below key support level of 17,500 and is trading at 17,409, down 1.18 per cent for the day. On the other hand, the Sensex has declined below its support at 58,600 and is trading 1.1 per cent down at 58,388. The outlook is bearish. A further fall to 17,150-17,000 on the Nifty and Sensex can fall to 57,000-56,000 from here in the coming days.
In Asia, barring the Shanghai Composite (3,527, up 0.13 per cent) all other major indices are trading in the red. Nikkei 225 (27,513), Hang Seng (24,731) and Kospi (2,788) are down in the range of 0.03-1.6 per cent.
In the US, the Dow Jones Industrial Average (34,265.37) tumbled 1.3 per cent on Friday and has closed just above the crucial support level of 34,000. It will have to be seen if the Dow manages to sustain above 34,000 or breaks below it and falls further to 33,000.
The outcome of the US Federal Reserve’s meeting on Wednesday night will be a crucial event to watch this week. A more hawkish tone from the Fed would intensify the sell-off in the global equity markets.
Futures: The Nifty 50 (17,423) January Futures contract is trading down over a per cent today. A further fall to 17,250-17,000 is possible in the coming sessions. Resistances at 17,560 and 17,680 can cap the upside from here. Traders can go short at current levels and accumulate on rallies at 17,540. Stop-loss can be placed at 17,630. Trail the stop-loss down to 17,390 as soon as the contract comes down to 17,280. Move the stop-loss further down to 17,290 as soon as the contract touches 17,210. Book profits at 17,150.
The contract will have to rise past 17,680 to bring back the bullish sentiment. But that could be very difficult as every bounce going forward will see fresh sellers coming into the market.
Strategy: Go short now and on rallies at 17,540 with a stop-loss at 17,630 for the target of 17,150. Trail stop-loss down to 17,390 as soon as the contract falls to 17,280. Move the stop-loss further down to 17,290 as soon as the contract touches 17,210.
Supports: 17,250 and 17,000
Resistances: 17,560 and 17,680
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