Nifty Call: Traders should avoid taking fresh long positions

Nifty 50 December Futures (10,690)

Following negative global cues, Nifty and Sensex began the session with a gap-down opening and continued to trend downwards. Asian markets were also in the negative territory. Nikkei 225 plunged 417 points or 1.9 per cent to 21,501.

Domestic benchmark indices, Nifty and Sensex, hover in the red without any major sign of recovery. The market breadth of the Nifty index is biased towards declines. All the sectoral indices are trading in the negative territory.

Nifty December month futures started the session with a large gap-down opening at 10,750 levels and extended its downmove. The contract has decisively breached key supports at 10,800 and 10,750 while trending down.

After slipping below the next vital base level of 10,700, the contract recorded an intra-day low of 10,665. But it has slightly bounced back from its intra-day low and trades at around 10,680 levels.

A strong break above 10,700 can provide a corrective upmove to 10,725 or even to 10,750 levels. That said, failure to move beyond the key resistance level of 10,750 can drag the contract down once again.

As long as the contract trades below 10,750, the near-term outlook remains bearish. Key resistance above 10,750 are at 10,780 and 10,800. Supports below 10,670 are placed at 10,650 and 10,625 levels.

Strategy: The contract could remain volatile; traders should avoid taking fresh long positions.

Supports: 10,670 and 10,650

Resistances: 10,700 and 10,725

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