Trade setup for Feb 25: Can Nifty50 handle more shockwaves? Key market cues, what technical charts suggest

The Nifty50 has formed a long bear candle on the daily chart with a huge gap-down, with a violent breach of crucial support at 16,800-16,700 levels, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

"An immediate sharp recovery is not expected. Going by the daily chart, the downside breakout of the triangle pattern could open potential downside of 15,900 levels in the near term," he said.

"The Nifty50 closed below the 200-day simple moving average after a long time. Considering the uncertainties, the index may trade lower between 16,800 and 16,000," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

"The market is in a corrective mode and will complete its corrective pattern between 16,200 and 16,000," he said.

At 7:50 am on Friday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty index -- were up 265.5 points or 1.6 percent at 16,502.5, having risen as much as 372.5 points earlier in the day.

Equities in other Asian markets began the day on a positive note tracking a dramatic overnight recovery on Wall Street, after US President Joe Biden unveiled harsh new sanctions against Russia. MSCI's broadest index of Asia Pacific shares outside Japan was up 0.7 percent at the last count.

Japan's Nikkei 225 was up 1.4 percent, China's Shanghai Composite 1.3 percent and Hong Kong's Hang Seng 0.4 percent. South Korea's KOSPI was up 1.1 percent and Singapore's Straits Times 1.3 percent.

S&P 500 futures were down 0.6 percent. On Thursday, the three main Wall Street indices bounced back to recoup initial losses. The S&P 500 rose 1.5 percent, the Dow Jones 0.3 percent and the technology stocks-heavy Nasdaq Composite 3.3 percent.

"The markets will behave like a wild animal but we suspect any weak rebound attempt will again be swept aside by the bears at around 16,700-16,900 on the Nifty," said Prashanth Tapse, Vice President (Research) at Mehta Equities.

He suggests traders to continue with a 'sell on the rise' strategy.

Mohit Nigam, Head-PMS at Hem Securities, has identified the following levels:

Foreign institutional investors (FIIs) net sold Indian equities worth Rs 6,448.2 crore on Thursday, according to provisional exchange data. However, domestic institutional investors (DIIs) saved the day, making net purchases of Rs 7,667.8 crore.

Exchange data shows the maximum call open interest is accumulated at the strike price of 16,400, with 1.2 lakh contracts, followed by 16,500, with one lakh contracts. On the other hand, the maximum put open interest is at 16,000 and 16,200, with 1.1 lakh contracts each.

This suggests the Nifty faces a major hurdle at 16,400-16,500, and meaningful support after 16,200 only at 16,000.

Here are five stocks that saw a decrease in open interest as well as price, suggesting unwinding of long positions:

No stock saw long build-up, which is an increase in price as well as open interest.

No stock in the BSE 500 basket managed to hit a 52-week high.

As many as 97 stocks on the bourse's broadest index hit 52-week lows, including SBI Cards, Shree Cement, RBL Bank, Dr Reddy's ICICI Lombard, LIC Housing, HDFC Life, HDFC AMC, Indiabulls Housing, IGL, Strides Pharma, Ujjivan SFB, MRF, MCX, Manappuram, Amara Raja, Dilip Buildcon, SpiceJet and Exide.