Trade Today
Date: February 18, 2025
Overview:
The Nifty 50 and Bank Nifty indices rebounded on February 17 after a week of significant losses, signaling a potential shift in market sentiment. While the broader trend remains bearish, technical indicators and price action suggest a possible short-term recovery. Key levels and technical signals are being closely monitored to determine the sustainability of the rebound.
Nifty 50 Analysis:
1. Key Levels:
Support: 22,800 (crucial support), 22,600 (short-term support).
Resistance: 23,000 (immediate resistance), 23,300–23,500 (key resistance zone), 23,700 (aggressive Call writing).
2. Technical Indicators:
The Nifty 50 has closed positively after eight consecutive days of losses, holding the 22,800 support level.
The Put Call Ratio (PCR) improved from 0.64 to 0.81, indicating strong Put additions at lower levels (22,600 strike), which acts as a short-term support.
The hourly RSI shows bullish divergence, suggesting potential upward momentum.
India VIX cooled off after an initial spike, closing at 15.72. A move above 16 could indicate further weakness, while staying below may support a bounce-back.
3. Market Sentiment:
The bears have failed to close below 22,800 in four out of the last 16 sessions, confirming it as strong support.
The market breadth was positive, with frontline stocks showing resilience compared to broader markets, limiting downside risks.
4. Strategy:
Buy Nifty Futures near 23,000 with a stop-loss below 22,750, targeting 23,500.
A sustained move above 23,000 could trigger short-covering, pushing the index toward 23,250–23,500.
Bank Nifty Analysis:
1. Key Levels:
Support: 49,000 (immediate support), 48,500 (key support).
Resistance: 49,500 (falling 20-day EMA), 49,800 (swing high), 50,000–51,000 (upside targets).
2. Technical Indicators:
Bank Nifty has maintained its outperformance, closing positively in the last session.
The PCR improved from 0.66 to 0.74, with Put additions at lower levels and Call unwinding at higher levels.
The hourly RSI shows bullish divergence, indicating potential upward momentum.
3. Market Sentiment:
The index rejected the swing low near 48,700, signaling a combination of short-covering and fresh buying.
The 49,000 level has held as strong support, with significant open interest buildup at this strike.
4. Strategy:
Buy Bank Nifty Futures near 49,350 with a stop-loss below 48,700, targeting 50,550.
A break above 49,500 could accelerate short-covering, pushing the index toward 49,800 and beyond.
Key Observations:
1. Nifty 50:
The index is in a consolidation phase, with 22,800–23,000 acting as a critical range.
A sustained move above 23,000 could signal a trend reversal, while a break below 22,800 may lead to further downside.
2. Bank Nifty:
The index is showing relative strength, with 49,000 acting as a strong support.
A break above 49,500 could trigger a strong rally, supported by short-covering and bullish momentum.
Overall Strategy:
Nifty 50: Adopt a cautious bullish approach. Buy on dips near 22,900–23,000 with a stop-loss below 22,750, targeting 23,500. Watch for sustained strength above 23,000 for confirmation of further upside.
Bank Nifty: Focus on a buy-on-dips strategy in the 49,200–49,000 zone, targeting 49,500 and 49,800. A break above 49,500 could signal an extended rally toward 50,000–51,000.
Risk Factors:
India VIX: A spike above 16 could indicate renewed market weakness.
Global Cues: External factors such as geopolitical tensions or global market volatility could impact sentiment.
FII Activity: High net short positions by FIIs (1.6 lakh contracts) could lead to sharp short-covering rallies or further selling pressure.
Conclusion:
While the broader trend remains bearish, technical indicators and price action suggest a potential short-term recovery in both Nifty 50 and Bank Nifty. Traders should focus on key support and resistance levels, adopting a buy-on-dips strategy with strict stop-losses. A sustained move above critical resistance levels (23,000 for Nifty and 49,500 for Bank Nifty) could signal a stronger bullish reversal, while failure to hold support levels may lead to further consolidation or downside.
Anish Jagdish Parashar
Securities Analyst Indirect Tax India research
Date: February 18, 2025
Disclaimer: Content above suggest author's view ;for trade and investment consult your financial advisor .
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