Trade Setup for Feb 12: Nifty 50 in consolidation mode as 22,000 remains the key level

India's stock benchmarks made a recovery in the second half of Friday's trading session as investors bought banking, financial, and pharma stocks ahead of the last leg of the third-quarter corporate results and key macro data this week.

In this week gone by, Nifty shed 120 points or 0.55% to finish at 21,782.5, while BSE Sensex tumbled 723.21 points or 1% to close at 71,595.49. PSU banks, meanwhile, outshined with the State Bank of India leading with a 12% rally in just five trading sessions.

Sharp selling was also seen in the broader domestic market on account of the rise in crude oil prices and muted global cues amid the Lunar New Year holiday in Asian markets. Despite the selloff on Friday, Nifty Midcap 100 ended 0.85% higher for the week, while Nifty Smallcap 100 slipped 0.05%.

Speaking to CNBC-TV18, Vikas Khemani of Carnelian Asset Advisors expect PSUs to have some kind of correction, consolidation. However, he continues to remain positive in the PSU bank space or any PSU, which he believes has a structural story.

"There is a very big reset happening in terms of governance across PSU, especially if we were to talk about PSU bank, governance technology, and asset quality — all three big issues of those banks have been addressed, specifically, more importantly, governance and technology," Khemani said.

Meanwhile, foreign investors were net buyers, buying ₹141.95 crore, in the cash market on February 9, while domestic investors were heavy sellers, selling ₹421.87 crore in equities.

Going ahead, analysts expect the market to turn cautious and consolidate in the near term in the run-up to the January India inflation numbers scheduled on February 12 and the last leg of Q3 FY24 earnings.

"Post the hawkish commentary from the US Federal Reserve and the RBI and their focus on bringing inflation under control, next week's inflation data would be important data to watch out for," said Siddhartha Khemka, Head - Retail Research at Motilal Oswal Financial Services.

"After a volatile session, the market ended on a positive note, aided by a rebound in banking stocks after yesterday’s sell-off. Mid- and small-cap indices bled the most as the sentiment on the broader indices remains vigilant due to their rich valuation. Caution prevails in the market ahead of the release of US, UK, and Indian inflation data next week, while the US 10 year yield is inching higher," said Vinod Nair, Head of Research at Geojit Financial Services.

According to Vaishali Parekh of Prabhudas Lilladher, the market has been consolidating and investors are seeing a bit of volatility. "So Nifty right now is at a crucial juncture. 21,700 – if these levels break then we are heading for some good corrective move but otherwise it could be a sideways to narrow rangebound movement," Parekh said.

"The Nifty is currently placed at the immediate support of the uptrend line around 21550-21600 levels. Positive chart patterns like higher tops and bottoms are intact and Friday’s low of 21630 could be considered as a new higher bottom," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

Further, Shetti said that the overall uptrend status of Nifty remained intact and there is a possibility of further upside towards 22000 levels in the near term. Any dips down to 21600-21500 levels could be a buying opportunity.

According to Nandish Shah of HDFC securities, after initial weakness, Nifty found support at 21630 and recovered 152 points, to close at 21782. "Nifty is still in a consolidation zone where 22000 would continue to offer resistance, while the 21500-21600 band could act as support."

Rupak De of LKP Securities said that the Nifty started flat and remained sideways during the trading session. "It found support at the 20DMA for the second day in a row. The trend could weaken if it decisively drops below 21,690. A decisive fall below 21690 may trigger a correction towards 21,500. On the contrary, if it moves above 21,800, we might observe a recovery in the near term."

As far as the Bank Nifty is concerned, it has got its correction done for now because Friday witnessed participation from the private sector banks and it is holding on to the 200-day moving average of 45,000 level, according to Parekh. So if these levels break on closing basis, there is room for more correction. So for Nifty, it is 21,700 and Bank Nifty it is 45,000, the analyst added.

"The Bank Nifty bulls exhibited strength as they successfully defended the crucial support level of 45000, establishing it as a critical support zone. The index is currently in a 'buy on dip' mode, and as long as the mentioned support holds on a closing basis, the bullish sentiment remains intact," said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

Looking ahead, Shah expects the immediate resistance on the upside at 46000, and a decisive break above this level is anticipated to trigger further short-covering moves in the market."

Nifty 50's February futures shed 4.9% or 6.06 lakh shares in Open Interest on Friday. They are now trading at a premium of 60.10 points compared to 96.65 points earlier. On the other hand, Nifty Bank's February futures shed 5.9% or 1.94 lakh shares in Open Interest. Nifty 50's Put-Call Ratio remains at 0.99 as against 1.00 earlier.

Zee Entertainment Enterprises Limited have entered the F&O ban from today's session.

Ashok Leyland, Aurobindo Pharma, Biocon, Balrampur Chini, Delta Corp, Hindustan Copper, India Cements, Indus Towers, PNB, SAIL, UPL continue to remain in the ban.

National Aluminium Company Ltd is out of the F&O ban.

For this week's weekly options expiry, the Nifty 50 Call strikes between 21,700 and 22,000 have seen Open Interest addition.

On the Put side though, the Nifty 50 strikes of 21,500 and 21,650 saw some writing, as did the 21,700 strike for this week's expiry.

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- State-owned ONGC has posted a consolidated profit of ₹9,536 crore for the quarter ended December, down 13.7% as against the year-ago period. Revenue from operations fell 9.8% YoY to ₹34,789 crore for the quarter, with crude oil price realisation falling 6.4% YoY to $81.59 a barrel.

- Multi Commodity Exchange (MCX) has recorded a net loss of ₹5.35 crore for the December quarter, compared to a profit of ₹38.79 crore in corresponding period of last fiscal despite strong topline growth. Revenue from operations rose 33.4% on-year to ₹191.5 crore for the quarter.

- Shares of Apeejay Surrendra Park Hotels will debut on the bourses tomorrow, February 12. The final issue price has been fixed at ₹155 per share.