Nifty 50 January futures (21,670)

Nifty 50 is coming down after opening with a gap-up. The index touched a high of 21,750 at the opening trades but has come down from there. It is currently trading at 21,643, up 0.33 per cent.

The price action indicates the presence of fresh sellers above 21,700 and the lack of strong follow-through buyers. This keeps the broader sentiment negative. Support is at 21,600 – an important intraday support can be tested during the day. It is important to if the index is managing to bounce back from this support or not.

A break below 21,600 can drag the index down to 21,500 and even lower. On the other hand, if the Nifty bounces back from around 21,600 then a rise to 21,700-21,800 can be seen again.

As such the price action around 21,600 will need a close watch during the day.

Global indices

In Asia, barring the Shanghai Composite (2,746, down 0.35 per cent), other major indices are in green. Hang Seng (15,329) is up over 2 per cent. Nikkei 225 (36,668) and Kospi (2,471) are up about 0.3 per cent each.

The Dow Jones Industrial Average (38,001.81) is looking bullish for the week. It can rise to 38,300 in the coming days. A break above 38,300 will boost the bullish momentum. Such a break will pave the way for the Dow Jones to target 39,000-39,300 in the coming weeks.

Nifty 50 futures

Nifty 50 January futures (21,670) is up 0.3 per cent. The contract made an intraday high of 21,783 and has come down sharply from there. Intraday resistance will be in the 21,680-21,700 region.

The outlook is bearish to see a fall to 21,550-21,500 in the coming sessions. A strong rise above 21,700 is needed to negate this fall. But that looks less likely.

Trading strategy

Traders can go short now. Keep a stop-loss at 21,710. Trail the stop-loss down to 21,640 as soon as the contract falls to 21,610. Move the stop-loss further lower to 21,590 when the contract touches 21,570. Exit the shorts at 21,550.

Supports: 21,550, 21,500

Resistances: 21,700, 21,800