Trade Setup for February 14: Nifty trend remains choppy in short-term; US inflation data in focus

The Indian stock market closed at day's high amid volatility, regaining half of Monday's losses. The Nifty50 index holds 21,700. The midcap index also recovered sharply, gaining about 1,000 points from lows.

At close, the Sensex rose 482.70 points or 0.68% at 71,555.19, and the Nifty gained 127.30 points or 0.59% at 21,743.30. The Nifty Bank index also shed previous session losses and settled 1.38% higher at 45,502.40.

Hindalco Industries, Grasim Industries, Divis Laboratories, UltraTech Cement and BPCL were among the top losers on the Nifty50 index, while gainers included Coal India, UPL, Axis Bank, HDFC Life and ICICI Bank.

All sectors ended in green, except metals. Banking and Financial Services were top gainers. The PSU sector has bounced back after witnessing profit booking over the last few trading sessions.

Meanwhile, foreign investors were net buyers, buying ₹376 crore, in the cash market on February 13, while domestic investors also bought ₹274 crore in equities.

Nifty bounced back from Monday's losses after India's CPI inflation came in at a three-month low of 5.10%. Going ahead, Nifty is expected to remain in the broader range given the lack of positive triggers globally and mixed set of domestic third quarter earnings, which too is unable to provide any support, said Siddhartha Khemka of Motilal Oswal Financial Services.

Khemka said all eyes will now be on US inflation data that will be released Tuesday, as it will hold key importance from the US Fed interest rate cut point of view.

According to Ajit Mishra of Religare Broking, the recent price action in the index shows indecisiveness among the participants; thus traders should continue with stock-specific approach and wait for clarity. "Besides, we suggest utilizing further rebound to reduce longs, especially in the PSUs and other overbought sectors or themes."

"The domestic market largely recovered from yesterday's losses, driven by gains in the banking sector. Improved sentiment stemmed from a decline in domestic inflation, which is expected to boost rural demand. Despite this, broader markets continued to underperform compared to frontline indices due to high valuations. However, investors remained cautious ahead of US inflation data, anticipating a moderation, pivotal for the Fed's interest rate trajectory," said Vinod Nair, Head of Research, Geojit Financial Services.

The Nifty exhibited volatility throughout the day, mostly fluctuating within the range of 21650 and 21750. The prevailing sentiment is expected to persist in a sideways to bearish direction as long as the index stays below 21850, said Rupak De, Senior Technical Analyst at LKP Securities.

On the downside, De said a short-term support level is identified at 21500. A "significant decline below 21500 could potentially initiate a correction towards 21270/21000. Conversely, on the upside, a decisive breakthrough above 21850 might trigger a rally towards 22200."

Nagaraj Shetti of HDFC Securities expects the short-term trend of Nifty to remain choppy with alternative candle formations like bull and bear. "A sustainable move above the immediate resistance of 21800-21850 levels could open sharp upside towards another resistance of 22000-22100 levels in the near term."

The bulls made a strong comeback, defending the critical support level of 44800, which now serves as a cushion for further upside, said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

"The index remains in a buy mode as long as the mentioned support holds, and any dips should be utilized to add long positions. The immediate resistance on the upside is situated at 46000, where the highest open interest is built up on the call side, indicating a potential target for the bullish momentum," Shah added.

Reliance Industries, along with ICICI Bank, were among the biggest Nifty50 contributors. RIL also became the first Indian company to hit a market capitalization of ₹20 lakh crore.

The RIL stock also hit a new record high of ₹2,957 per share on the BSE and rose nearly 2% intraday on Tuesday. The Mukesh Ambani-owned company had first crossed the mark of ₹10 lakh crore in market capitalisation for the first time on November 28, 2019.

Nifty 50's February futures added 1.2% or 1.44 lakh shares in Open Interest on Tuesday. They are now trading at a premium of 80.50 points compared to 81.80 points earlier. On the other hand, Nifty Bank's February futures added 2.8% or 89,745 shares in Open Interest. Nifty 50's Put-Call Ratio remains at 0.98 as against 0.85 earlier.

For this week's weekly options expiry, the Nifty 50 Call strikes between 21,700 and 21,900 have seen Open Interest addition.

On the Put side though, the Nifty 50 strikes of 21,500 and 21,600 saw some writing, as did the 21,700 strike for this week's expiry.

National Aluminium Company Limited have entered the F&O ban from today's session.

Aditya Birla Fashion and Retail, Bandhan Bank, Zee Entertainment Enterprises Limited, Ashok Leyland, Aurobindo Pharma, Biocon, Balrampur Chini, Delta Corp, Hindustan Copper, India Cements, Indus Towers, PNB, and SAIL continue to remain in the ban.

Hindustan Copper is out of the F&O ban list.

- Bharat Electronics Limited (BEL) has signed a contract worth ₹2,167.47 crore with the Indian Navy on for the supply indigenously designed and developed Electronic Warfare (EW) suite for use on-board warship.

- Adani Group companies: About a year after revising its outlook to 'Negative' on four Adani Group companies following Hindenburg's report, global ratings agency Moody’s Investors Service has revised it back to 'Stable'. Moody’s has revised the outlook on Adani Green Energy, Adani Green Energy Restricted Group (AGEL - RG-1), Adani Transmission Step One, and Adani Electricity Mumbai to 'Stable' from 'Negative', the agency said.

- Wipro has invested $66 million in the US-based Aggne Global Inc. to strengthen its consulting and services capabilities in the insurance sector. Now the company will be acquiring a 60% stake in Aggne and has kept the option to purchase the remaining stake over a period of time. The transaction is expected to be completed by February 14, 2024.

- Sula Vineyards has registered a net profit at ₹43 crore for the October–December period of FY24, growing 9.4% YoY, aided by healthy operating numbers. Revenue from operations grew by 4% YoY to ₹217.5 crore for the quarter, with the own brands segment growing 3.9% to ₹192.8 crore and the wine tourism business rising 16% to ₹14.7 crore during the quarter.

- IRCTC clocked a 17.4% YoY increase in standalone net profit at ₹300 crore for the quarter ended December FY24. Revenue from operations grew by 21.8% YoY to ₹1,118.3 crore for the quarter.

- Zee Ent has registered a 141% YoY rise in net profit at ₹58.5 crore for the third quarter of FY24, despite disappointing operating numbers. The base in Q3 FY23 was low as the profit was impacted by an exceptional loss. Revenue from operations fell 3% YoY to ₹2,045.7 crore for the quarter, while EBITDA plunged 42.9% year-on-year to ₹209.2 crore and margin declined 720 bps to 10.2% in Q3 FY24.

Overnight in the US, the hotter-than-expected inflation data saw all three major indexes lose ground, with the Dow Jones Industrial Average sliding 1.35%, clocking its worst session since March 2023 on a percentage basis.

The S&P 500 slid 1.37%, while the Nasdaq Composite fell 1.8% to settle at 15,655.60.

US January inflation came in hotter than expected, with the consumer price index climbing 3.1% on a 12-month basis and 0.3% for the month.

Core prices, which exclude volatile food and energy components, rose 0.4% month over month and 3.9% from a year ago. Core CPI was expected to have increased 0.3% in January and 3.7% from a year earlier, respectively.