Answer:
 sell 1.714
Explanation:
The computation of the number of contract buy or sold to hedge the position is shown below:
As we know that
Number of contracts = Hedge Ratio    
Hedge Ratio = Change in Portfolio Value ÷ Profit on one future contract
where, 
Change in the value of the portfolio is 
For that we need to do following calculations
Expected Drop in Index is 
= (1200 - 1400) ÷ 1400    
= -14.29%    
And, Expected Loss on the portfolio is 
= Beta × Expected index drop
= 0.60 × (-14.29%)    
= -8.57%    
So, the change is 
 = 1000000 × (-8.57%)	
= -$85,700  
And, the profit is 
= 200 × 250 multiplier 
= 50,000
So, the hedging position is 
= -$85,700 ÷ 50,000      
 = -1.714   
This reflects the selling position