Nifty Call: Go short on rallies at 10,710 and 10,725 with a stop-loss at 10,740

Nifty 50 Feb Futures (10,686)

The sell-off in the Indian equity market continues. The Nifty 50 futures contract has begun the week on a weak note by opening with a wide 125 points gap-down at 10,629.

The contract made a low of 10,606 and has bounced back from there. Support in the 10,625-10,600 region is holding well as of now. If the contract manages to sustain above 10,625, a relief rally breaking above 10,700 towards 10,725 or even 10,750 is possible in the near-term.

However, the overall trend remains negative and the outlook will continue to remain bearish. As such the upside could be capped at 10,725 or 10,750.

An eventual break below 10,600 will bring in renewed selling pressure. Such a break will drag the index futures lower to 10,550 or even 10,500 thereafter.

Traders can stay on the sidelines now and wait for rallies to go short at higher levels at 10,710 and at 10,725. Stop-loss can be placed at 10,740 for the target of 10,660. Revise the stop-loss lower to 10,695 as soon as the contract moves down to 10,680.

Strategy:  Go short on rallies at 10,710 and 10,725 with a stop-loss at 10,740

Supports: 10,625, 10,600

Resistances: 10,725, 10,750

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