Nifty Call: Sell the contract in rallies with a tight stop-loss at 10,9100 levels

Nifty 50 February Futures (10,879)

Benchmark indices, the Nifty and Sensex, started the post-Budget session with a gap-down open and continued to decline.

The indices are witnessing selling pressure and are down more than 1.5 per cent in today's session. Sharp fall in mid- and small-cap indices, which have tumbled more than 3.5 per cent, is also causing selling interest in the market.

India VIX is up 4.8 per cent to 14.7 in reaction to sell-off. Bank Nifty and Nifty Realty indices have slumped 2 per cent and 3.7 per cent, respectively. Market breadth of the Nifty index is more biased towards declines.

Nifty February futures contract started the session with a gap-down open at 10,928, breaching the key support level at 11,000. Subsequently, the contract extended the fall and breached the next key support at 10,900 as well and recorded an intra-day low at 10,833 levels.

However, from this intra-day low the contract is witnessing a corrective rally and is trading at 10,860 levels. Overall, the near-term outlook is bearish for the contract. It can resume its down move and decline to re-test the key support at 10,835.

Traders can make use of intra-day rallies to sell the contract while maintaining a fixed stop-loss at 10,910 levels. Key immediate resistances are at 10,880 and 10,900.

Only a strong rally above 10,900 can extend the corrective rally to 10,928 and 10,950 levels. That said, continuation of the down move and a fall below 10,850 level can pull the contract down to 10,835 and then to 10,800 levels. Next supports are placed at 10,750 and 10,700.

Strategy: Sell the contract in rallies with a tight stop-loss at 10,9100 levels.

Supports: 10,850 and 10,835

Resistances: 10,900 and 10,928

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