Nifty call: Go short on rallies with stop-loss at 12,250

Nifty 50 January futures (12,220)

Following the bearish cues from the Asian markets, the Indian benchmark indices are heading south. Both the indices, i.e. the Nifty spot and the Sensex spot index, are down by 0.25 per cent each so far today. Major Asian indices such as the Nikkei and Hang Seng are down by 0.9 per cent and 2 per cent respectively.

The advances-declines ratio of the Nifty 50 index at 20-30 hints at a bearish bias. All the sectoral indices, barring the Nifty media index (up by 1.85 per cent) and the Nifty pharma index (up by 0.4 per cent), are trading lower. The weakest was the Nifty realty index, down by 1 per cent. The market is witnessing higher volatility as India VIX – the volatility index -- has gone up by 2.3 per cent to 15.76 levels.

The January futures contract of the Nifty index opened lower at 12,212, compared to yesterday’s close of 12,263. The contract has rebounded from the support at 12,190 and is currently hovering around 12,220. For the contract to establish a sustainable rally, it must break out of 12,230 decisively. Until then, it can be approached with a bearish bias. For intra-day trading, one can short the contract on rallies with stop-loss at 12,250.

Strategy: Go short on rallies with stop-loss at 12,250

Supports: 12,190 and 12,130

Resistances: 12,230 and 12,300