Nifty Call: Tread with caution as contract is range-bound

Nifty 50 January Futures (14,442)

The Sensex and the Nifty 50 commenced the session with a gap-up and continues to trade in a sideways range. The Asian markets are mixed in today's session, the Hang Seng index is marginally up by 0.16 per cent to 27,921 while CSI 300 index is down by 0.95 per cent to 5,443 levels. The Sensex and the Nifty 50 have advanced 0.75 per cent and 0.64 per cent respectively so far. But the Nifty mid and small-cap indices have slumped 1 per cent and 0.65 per cent correspondingly. The India VIX has jumped 8.2 per cent to 22.3, implying an increase in volatility. Among the sectoral indices, the Nifty IT index has jumped 2.3 per cent and is the top gainer followed by Nifty Auto, FMGC and Realty which have climbed 1 per cent each. On the other hand, selling interest is seen in the Nifty metal and media that have declined 1.9 per cent and 1.45 respectively.

The Nifty 50 futures contract started the session with a gap-up open at 14,453. After marking an intraday high at 14,495 the contract began to decline witnessing selling interest and recorded an intraday low at 14,400 levels. The contract is now range-bound between 14,420 and 14,470. As long as the contract is range-bound, traders should tread with caution. A strong rally above 14,470 can reinforce the bullish momentum and take the contract higher to 14,490 or 14,500 levels. Next key resistance above 14,500 are placed at 14,525 and 14,550 levels. On the other hand, a substantial fall below the lower boundary ay 14,420 can pull the contract down to 14,400 initially. A further decline below 14,400 can drag the contract down to 14,375 and 14,350 levels.

Strategy: The contract is range-bound, tread with caution

Supports: 14,420 and 14,400

Resistances: 14,470 and 14,500

BL Research Bureau