The Indian benchmark indices – the Nifty 50 (17,930) and the Sensex (61,010) – after opening today’s session a bit lower, have recovered and are trading around yesterday’s closing level.

Among the major Asian indices, Nikkei 225 (27,475), ASX 200 (7,350), Hang Seng (20,820) and KOSPI (2,430) have lost between 0.5 and 1.4 per cent. Nevertheless, the domestic indices have managed to stay flat despite the bearish cues.

Interestingly, compared to the benchmarks, the mid- and small-cap indices are doing better. For instance, Midcap 50 and Smallcap 50 are up by 0.35 and 0.15 per cent, respectively. Among the sectors, Nifty Media is the top gainer, up by 0.85 per cent whereas Nifty FMCG is the top loser, down by nearly 1.1 per cent so far.

Nifty 50 futures

The February futures of the Nifty 50 index opened lower at 17,900 versus yesterday’s close of 17,945. It rose above the open and is currently hovering around 17,940.

Considering the price action since early last week, the contract appears to be forming a range between 17,750 and 18,000. The direction of the break of this range will lend us a clue about the next of trend.

If the contract breaks out of 18,000, the short-term trend will turn bullish where the price could rise to 18,250 quickly. But if the contract falls from here i.e., on the back of the range top, it is likely to retest the support at 17,750. A breach of this can turn the trigger another leg of fall to 17,580.

Trading strategy

Since Nifty futures is trading near the top of a range, traders can risk going short on the contract at the current level of 17,940. Add more shorts if price goes up to 18,000. Place initial stop-loss at 18,075 and modify it to 17,950 when price falls to 17,850. Exit the shorts at 17,750.

Supports: 17,850 and 17,750

Resistance: 17,940 and 18,000

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