The Indian benchmark indices – the Nifty 50 (17,590) and the Sensex (60,085) – began the session with gain. While both the indices softened, Sensex is still in the green whereas Nifty is trading flat as it stands.

The market breadth of the Nifty 50 is indicating a bearish bias as the advance/decline ratio stands at 20/30. Like the benchmark, the mid- and small-cap indices are in the red and most of the sectors have also lost.

Nifty Metal is the top loser, down by 4.3 per cent. On the other hand, Nifty Financial services is the best performing index, up by 0.9 per cent.

Nifty 50 futures

The February futures of the Nifty 50 index opened higher at 17,758 versus yesterday’s close of 17,685. Although it rallied to hit a high of 17,783, it has given up the gains and is now hovering around 17,700.

On the upside, the contract has a strong resistance at 17,750. A breach of this can induce more positive momentum which can lift the contract to 17,900.

But, if Nifty futures fall from the current level, the nearest support it can find is at 17,580. Subsequent support is at 17,520.

Trading strategy

As the contract faces a barrier, traders can risk going short at the current level where the risk-reward ratio is good. Short Nifty futures now at around 17,700 with stop-loss at 17,800.

When the contract falls to 17,600, revise the stop-loss to 17,680. Book profits at 17,520.

In case the stop-loss is triggered, we can assume that the contract has breached the resistance at 17,750 and can initiate fresh longs. Buy at around 17,800 with stop-loss at 17,700. When the contract touches 17,900, tighten the stop-loss to 17,820. Exit the longs at 17,975.

Supports: 17,580 and 17,520

Resistance: 17,750 and 17,900

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