Nifty Call: Nifty 50 March futures (16,580)

The US markets ended with a loss on Tuesday, i.e., the S&P 500 and the Dow Jones lost 1.6 and 1.8 per cent, respectively. Following this, the Asian markets look mixed – the Nikkei 225 and Hang Seng are down by 1.7 and 1 per cent, respectively, whereas the ASX 200 and KOSPI are up by 0.3 and 0.6 per cent, respectively. Against this backdrop, the Nifty 50 and the Sensex opened the session with a gap-down and are now down by 1.3 and 1.6 per cent, respectively.

The market breadth of the Nifty 50 shows a bearish bias, with the advances-declines ratio of the index at 13-37. The mid- and small-cap indices are trading mixed – the Midcap 50 is marginally down by 0.1 per cent, but the Smallcap 50 has gained by 1 per cent. Among the sectoral indices, Nifty Metal is the top gainer, up by 4.1 per cent, whereas the Nifty Bank is down by 2.8 per cent.

Futures: Following the underlying Nifty 50’s bearish beginning, the March futures of the index opened with a gap-down at 16,595 versus yesterday’s close of 16,794. Although the overall trend is negative and the market shows a bearish inclination, the contract is supported at 16,550. Hence, traders can wait and initiate fresh short positions if this support is breached. That is, short Nifty futures below 16,550, with an initial stop-loss at 16,640.

On the downside, the contract could fall to 16,375, the nearest support. Subsequent support is at 16,250. So, when the price falls to 16,375, revise the stop-loss to 16,500. Exit the shorts when the price declines to 16,250.

Strategy: Short when the contract breaks below 16,550, with the initial stop-loss at 16,640. When the price falls to 16,375, revise the stop-loss to 16,500. Exit the shorts when the price declines to 16,250.

Supports: 16,550 and 16,375

Resistances: 16,640 and 17,675

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