Even though major equity indices across Asia are in the green, domestic benchmark indices have been down for the day so far. The Nifty 50, down by 0.6 per cent, is at 17,825 whereas the Sensex, down by 0.7 per cent, is at 59,675. However, Nikkei 225, ASX 200, Hang Seng and KOSPI are up by 1.4, 0.15, 2.6 and 0.45 per cent, respectively.

The market breadth of the Nifty is showing a bearish bias as the advance-decline ratio is at 20-30. Like the benchmarks, the Midcap 50 and Smallcap 50 have lost 0.1 and 0.2 per cent, respectively. Among the sectoral indices, the Nifty Metal index is the top performer, up by 0.65 per cent, followed by the Nifty PSU bank index, up by 0.3 per cent. On the other hand, the Nifty IT and Pharma are the top losers, down by 1 and 0.7 per cent, respectively.

Futures

The January futures of Nifty began the session slightly lower at 17,950 versus yesterday’s close of 17,974. After making an intraday high of 17,968, the contract reversed and fell sharply and is currently hovering around 17,860. The nearest support can be spotted at 17,760 below which 17,700 can be a support. On the upside, the contract will face resistance at 17,930 and 18,000.

Since the price action is indicating a strong bearish bias, we expect the contract to decline further to touch 17,700. Hence, traders can short Nifty futures at current level and short more if it rallies to 17,930 with initial stop-loss at 18,020. When the contract slips below 17,800, revise the stop-loss to 17,900. Liquidate 50 per cent shorts at 17,760 and the remaining at 17,700.

Strategy

Sell at current level (17,860) and short more on a rally to 17,930. Keep the stop-loss at 18,000. Revise stop-loss to 17,900 if the contract falls below 17,800. Liquidate 50 per cent at 17,760 and the remaining at 17,700.

Supports: 17,760 and 17,700

Resistances: 17,930 and 18,000

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