Trade setup for Feb 28: Is Nifty50 out of the woods? Key market cues, levels to watch, what technical charts suggest

The Nifty50 has formed a reasonable bull candle on the daily chart, reflecting the return of the bulls on Dalal Street, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

However, he warned that taking out crucial resistance at around 16,700-16,800 levels could be a tough task for the index in order to sustain the highs.

Since the Nifty's drop below the sacrosanct 200-day simple moving average of around 16,900 happened with a breakaway gap, the situation will remain challenging for traders till it reclaims 16,800-17,000 levels with some authority, Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, told CNBCTV18.com.

That is possible in the near term only if tensions ease on the Russia-Ukraine front, he said. "Till the time it does not happen, we are not completely out of the woods. On the other hand, immediate support is at 16,400 and then 16,200. but we will not be surprised if the index slides below 16,000 if things worsen," he said.

At 7:37 am on Monday, Singapore Exchange (SGX) Nifty futures -- an early indicator of the Nifty index -- were up 27 points or 0.2 percent at 16,686.5, having risen as much as 74.5 points earlier in the day. 

Equities in other Asian markets began the day largely lower, as nervousness persisted among investors about geopolitical tensions between Ukraine and Russia. MSCI's broadest index of Asia Pacific shares outside Japan was down 0.4 percent at the last count.

Japan's Nikkei 225 was down 0.3 percent, China's Shanghai Composite 0.5 percent and Hong Kong's Hang Seng 0.9 percent. Singapore's Straits Times was down 0.9 percent, and South Korea's KOSPI up 0.2 percent.

S&P 500 futures were down 2.2 percent, suggesting a gap-down start ahead on Wall Street. On Friday, the three main US indices rose 1.6-2.5 percent tracking gains across global markets as investors welcomed talk of renewed diplomacy after Russia's invasion of Ukraine.

Rahul Sharma, co-founder of Equity99 Advisory, advises maintaining adequate liquidity to take advantage of any big fall in the market by buying quality stocks.

He has identified the following levels:

Foreign institutional investors (FIIs) net sold Indian equities worth Rs 4,470.7 crore on Friday, according to provisional exchange data. However, domestic institutional investors (DIIs) made net purchases of Rs 4,318.2 crore.

Exchange data shows the maximum call open interest is accumulated at the strike price of 17,500, with 1.1 lakh contracts, followed by 18,000, with 78,500 contracts. On the other hand, the maximum put open interest is at 16,000 (69,450 contracts) and the next highest at 15,500 (59,450 contracts).

This suggests the Nifty faces a major hurdle at 17,500, and meaningful support only comes in at 16,000.

One stock in the BSE 500 pack hit a 52-week high: Fine Organic Industries.

Nine stocks hit 52-week lows: CEAT, Advanced Enzyme, Aegis Logistics, AIA Engineering, Heidelberg Cement, ITI, Jyothy Labs, VST Industries and Hawkins Cookers.

NSE's India VIX index -- which gauges the expectation of volatility -- cooled off -- 16.4 percent to settle at 26.7 on Friday, retreating from a 20-month high scaled the previous day.