Nifty 50 has risen well from its intraday low of 21,543. It is currently trading at 21,717, up 0.46 per cent. It is important to see if this bounce is sustained or not.

Nifty outlook

As seen from the price action over the last few days, the broader picture looks weak. As such fresh sellers are likely to enter the market at higher levels. Immediate resistance is near current levels at 21,750. Above that, 21,800-21,850 can be the next strong resistance zone.

We expect the Nifty to reverse lower again, either from 21,750 or after an extended rise to 21,800-21,850. That can drag the Nifty down to 21,600 initially and then to 21,400 and below eventually.

Global equities

In Asia, Nikkei 225 (37,798) has surged over 2 per cent. Kospi (2,645) is up about a per cent. Hong Kong and China stock markets are closed today.

The Dow Jones Industrial Average (38,797) was up 0.33 per cent on Monday. The index is holding well above the near-term support level of 38,500. This keeps alive the hope of a rise to 39,300-39,400 in the coming weeks. The price action thereafter will need a close watch for a reversal.

Nifty 50 futures

The Nifty 50 February futures (21,756) is up 0.28 per cent. The support at 21,620 has held well. There is room to test the key intraday resistance at 21,850. We expect the Nifty 50 February futures contract to reverse lower again from around 21,850. That can drag the contract down to 21,600.

Trade strategy

Traders can go short on a rise at 21,790 and 21,820. Keep a stop-loss at 21,870. Trail the stop-loss down to 21,760 as soon as the contract falls to 21,720. Move the stop-loss further lower to 21,680 when the contract touches 21,650 on the downside. Exit the shorts at 21,620.

Supports: 21,620, 21,500

Resistances: 21,850, 22,000