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The Indian benchmark indices — Nifty 50 (18,000) and Sensex (60,350) — which opened the day with a small gap-up, faced selling pressure soon after. Both indices fell sharply and are down by three-fourth of a per cent each.
The market breadth of the Nifty 50 is giving a bearish bias as the advance/decline ratio stands at 14/36. All the mid- and small-cap indices are also in the red, indicating a broad-based sell-off.
Among sectors, Nifty Auto, up by about 0.9 per cent, is the top gainer. Nifty PSU Bank is the top loser, down by 2.1 per cent.
Nifty 50 futures
The January futures of the Nifty 50 index opened flat at 18,173. It is now down by 0.7 per cent and hovering around 18,050. The chart hints at a further decline.
While the nearest support is the price band of 17,985-18,000, the contract is likely to slip below this and touch 17,900. On the other hand, if there is a rally from here, it is likely to be capped at 18,100.
Trading strategy
Given the overall bearish bias, one can consider initiating fresh short positions on Nifty futures at the current level of 18,050. Add more shorts if the contract rallies to 18,100. Place stop-loss initially at 18,150.
When the contract touches 17,985, tighten the stop-loss to 18,050. Exit the shorts at 17,920.
Note that the above trade recommendations are for intraday. So, exit the positions by the end of the day if either target or stop-loss levels are not hit.
Supports: 17,985 and 17,900
Resistance: 18,100 and 18,200
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