Nifty call: Sell on rallies with fixed stop-loss

Nifty 50 February futures (12,152)

The Sensex and the Nifty began the session on a flat note, taking weak cues from the Asian markets. The Nikkei 225 is down by 33 points or 0.14 per cent at 23,827, and the Hang Seng index has slipped 78 points or 0.28 per cent to 27,745 levels in today's session.

The domestic equity benchmark indices have continued to trend downwards in the red. The Sensex and the Nifty have declined 0.5 per cent and 0.44 per cent respectively.

The market breadth of the Nifty index is marginally biased towards declines. The India VIX that measures market volatility in the near term is up slightly by 0.18 per cent at 13.6 levels.

The Nifty mid and small-cap indices are down by 0.4 per cent and 0.14 per cent correspondingly. The Nifty Bank index has slumped 0.8 per cent, dragged by private sector banks. The Nifty PVT Bank index is the top loser, which has fallen 1.3 per cent, while the Nifty PSU Bank index is up by 0.9 per cent.

The February month index futures commenced the session in the negative, opening at 12,219.9 and continued to trend downwards. The contract breached a key support at 12,200 and extended the decline. It has recorded an intra-day low at 12,145 levels.

As long as the contract trades below 12,200, selling pressure will be in place. Traders can make use of intra-day rallies to go short with a fixed stop-loss. A decisive fall below the immediate support at 12,145 can pull the contract down to 12,125 and then to 12,100 levels. A further drop below 12,100 can drag the contract lower to 12,080 and 12,050 levels.

A key immediate resistance is at 12,200. Only a decisive rally above this level can trigger an upmove to 12,225 and then to 12,250 levels. The next resistances are at 12,280 and 12,300 levels.

Strategy: Sell on rallies with a fixed stop-loss

Supports: 12,145 and 12,125

Resistances: 12,200 and 12,225

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