On the back of mixed signals from the Asian market, the Indian benchmark indices opened on a flat note on Monday. Both the Nifty 50 (18,288) and the Sensex (61,310) are up by 0.2 and 0.15 per cent, respectively. Among the Asian majors, ASX 200 and Nikkei 225 are up by 0.3 and 0.85 per cent respectively, whereas the Hang Seng and KOSPI are down by 0.9 and 1.4 per cent respectively.

As the Nifty 50 is slightly up, the market breadth indicates a positive bias. The advance/decline ratio is at 30/20 currently. While the Midcap 50 (up by 0.1 per cent) is marginally up like the benchmark indices, the Smallcap 50 index has outperformed them by gaining 0.5 per cent. Therefore, small cap stocks seem to be luring investors today.

Among the sectoral indices, Nifty Auto is the top performer, up by 1.8 per cent, followed by the Nifty PSU bank, up by 0.8 per cent. On the other hand, Nifty Metal is the top loser, down by nearly 1 per cent, followed by the Nifty Healthcare, which has lost 0.85 per cent.

Futures: The January futures of Nifty 50 began the session lower at 18,248 as against Friday’s close of 18,295. Although it initially declined and marked an intraday low of 18,234, it reversed up and is now hovering around 18,316.

The price action of the past few trading sessions indicates that the contract has been trading within the range of 18,160 – 18,330. Therefore, until either of these levels are breached, we cannot assume the next leg of trend. Hence, traders can stay on the sidelines now and initiate fresh positions along the direction of the break of this range.

A breakout of 18,330 can lift the contract to 18,400 and then probably to 18,500. On the other hand, a break below 18,160, can drag the contract to 18,000. This can act as a strong support.

Strategy: Stay on the sidelines as the contract is moving within the range of 18,160–18,330.

Supports: 18,200 and 18,160

Resistances: 18,330 and 18,400

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