The Indian benchmark indices – Nifty 50 (17,700) and Sensex (60,140) – opened the session with a gap-down. However, both indices recovered and are now trading near the previous session’s closing level.

But the market breadth signals some sort of bearishness as the advance/decline ratio of Nifty 50 stands at 22/28. Like the benchmarks, the mid- and small-cap indices also are hovering around Monday’s closing level.

Among the sectors, only very few are in the green and the rest of the indices are down. Nifty Oil & Gas is the top gainer, up by a little over 0.7 per cent whereas Nifty Realty is the top loser, down by 1 per cent.

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In line with the bearish bias, major Asian indices, too, have depreciated. Among them, ASX 200 (7,300), Hang Seng (20,040), and KOSPI (2,430) are down between 0.8 and 2.4 per cent. However, Nikkei 225 (28,450) has gained about 0.5 per cent.

Nevertheless, the overall bias seems to be bearish for the equity market as it stands.

Nifty 50 futures

The March futures of the Nifty 50 index opened the week with a gap-down at 17,715 versus Monday’s close of 17,774. But it has recovered and is now trading around 17,750.

On the upside, the contract has resistances at 17,800 and 17,860. Therefore, going long at this level can be risky. Only a clear break out of 17,860 will open more space on the upside. Resistance above 17,860 is at 18,000.

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In case the Nifty futures decline from the current level, there is a support band of 17,630 – 17,660. Subsequent support is at 17,540.

Note that the price action has started showing signs of a consolidation between 17,630 and 17,860.

Trading strategy

Currently trading at 17,750, the Nifty futures is trading almost at the middle of the potential range of 17,630 – 17,860. So, the risk-reward ratio is not looking good for both long and short positions.

So, wait for now and initiate fresh buys if the contract breaches the resistance at 17,860. Place stop-loss at 17,775. Book profits at 17,990.

Note that the above trade recommendation is for intraday.

Supports: 17,630 and 17,540

Resistance: 17,860 and 18,000

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