Trade Setup for February 15: Nifty could retest 22000-22100 levels; what should traders do on Thursday?

Defying negative cues from global peers, Indian equity markets staged a smart recovery during Wednesday's intra-day trading to settle at day's high led by gains in State Bank of India, Bank of Baroda, and other PSU banks, which continue to see buying interest among traders.

At close, the BSE Sensex rose 267.64 points or 0.37% to settle at 71,822.83 and the Nifty50 gained 96.80 points or 0.45% to end at 21,840.05.

Banking stocks lead the recovery with the Nifty Bank index rising 3% from lows. SBI and Axis Bank stocks together contributed nearly 70% to Nifty Bank's gain. Nifty Bank gained 406 points to end at 45,908 and the midcap index closed 496 points or 1% higher at 48,332.

IT and pharma, meanwhile, underperformed, tracking US inflation data, which further dented sentiment around Federal Reserve interest rate cuts. Both indices were down a percent each.

Index heavyweight Reliance Industries Ltd extended its gaining streak, posting a record high for the second straight session. RIL became the first Indian company to reach ₹20 lakh crore in market value. It took the company 12 years to reach ₹10 lakh crore in 2017 from ₹1 lakh crore in 2005 and five more years to double to ₹20 lakh crore.

Foreign investors, meanwhile, were net sellers, selling ₹3,929.60 crore, in the cash market on February 14, while domestic investors were net buyers, buying ₹2,897.98 crore in equities today.

With result season almost over, the focus will shift to global cues and economic data points, said Siddhartha Khemka, Head - Retail Research at Motilal Oswal Financial Services. Khemka expects the market to see a gradual up move on back of strong fundamentals.

"The domestic market staged a recovery from day’s low, buoyed by renewed buying interest in banking stocks. Improving asset quality and the government's continued focus on fiscal prudence attracted PSU banks, yet concerns lingered regarding their elevated valuations. The optimism was further supported by favourable inflation figures from the UK, contributing to a widespread recovery. However, IT shares experienced selling pressure following the release of higher-than-expected US CPI, prompting concerns over potential delays in interest rate cuts and its impact on client spending," said Vinod Nair of Geojit Financial Services.

The tussle shows consolidation amid mixed cues and Religare Broking's Ajit Mishra feels it might continue in the near future. "In case of a further rebound, the 22,000-22,150 zone would continue to act as a hurdle in Nifty. Traders should stay focused on stock selection and refrain from aggressive bets."

According to Rupak De, Senior Technical Analyst at LKP Securities, the Nifty remained highly volatile, displaying predominant bullishness throughout the day following a weak start. "However, the sentiment remains sideways to negative as long as it stays below 21850. A decisive move above 21850 might trigger a strong rally in the market. Beyond 21850, the Nifty could potentially move towards 22200. Support for the near term is positioned at 21700."

"A long bull candle was formed on the daily chart on Wednesday, that has engulfed the small bull candles of previous few sessions. This pattern could be considered as a bullish engulfing pattern, which indicates short term bottom reversal for the Nifty," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

Shetti said the immediate support of 21500 has been held on Wednesday's volatile session and the short-term uptrend seems to be gaining momentum. "Nifty is currently placed at the edge of breaking above the immediate hurdle of 21850 levels and a decisive move above this resistance is likely to pull Nifty towards 22000-22100 levels in the short term. Immediate support is at 21720 levels."

"Nifty once again held onto the support levels of 21500, marked by the 61.8% retracement of the recent rally from 21137 to 22126," said Rajesh Bhosale of Angel One.

On the hourly chart, the analyst said that Nifty's closure above 21800 surpassing the last three session's high resembles a price breakout. "Sustained positive momentum, without significant global escalations, could lead Nifty to retest levels of 22000 - 22100. However, a strong upward trend would require surpassing 22100 to initiate a fresh upside. Support levels have shifted higher, with immediate support around 21650, and 21500 has gained significant credibility as a support level. As previously mentioned, a sharp sell-off would only occur if these support levels are breached."

The BankNifty bulls made a robust comeback, overpowering the bears and successfully defending the crucial support at 45000, said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

"The index is firmly in a buy mode, with immediate support at 45500 acting as a cushion for the bulls. The index is indicating an immediate target of 46500, and if it sustains above this level, further upside towards the 48000 mark can be anticipated," Shah added.

Nifty 50's February futures shed 1.5% or 1.77 lakh shares in Open Interest on February 14. They are now trading at a premium of 76.80 points, compared to 80.50 points earlier. On the other hand, Nifty Bank's February futures shed 5.8% or 1.93 lakh shares in Open Interest. Nifty 50's Put-Call Ratio remains at 1.23 as against 0.98 earlier.

For Thursday's weekly options expiry, the Nifty 50 Call strikes between 21,850 and 21,950 have seen Open Interest addition, as did the 22,000 strike.

On the Put side though, the Nifty 50 strikes of 21,500 and 21,600 saw some writing, as did the 21,700 and 21,800 strikes for this week's expiry.

Hindustan Copper has entered the F&O ban from today's session.

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

- Utkarsh Small Finance Bank board to meet to evaluate reverse merger with holding company, Utkarsh CoreInvest

- Hindustan Unilever (HUL) in talks with Andhra Pradesh government to collaborate on palm oil production. HUL seeks to partner with more than 15,000 farmers in Andhra Pradesh to create at least 30,000 hectares of oil palm plantations.

- Government approves appointment of Sanjay Kumar Jain as CMD of IRCTC with effect from February 14, 2024.

- Paytm issues clarification on news report ‘ED registers case against Paytm under FEMA violations’ and says Paytm Payments Bank does not undertake outward foreign remittance.

- Adani Enterprises: Mumbai Travel Retail, a step-down subsidiary of Adani Enterprises, has completed the incorporation process of a wholly owned subsidiary, namely OSPREE International FZCO, in the UAE.

- West Coast Paper Mills: West Coast Optilinks, a division of West Coast Paper Mills, has doubled its capacity for optical fiber cable production by setting up a new manufacturing unit at Fab City, Hyderabad.

- Sidwal Refrigeration Industries: The wholly owned material subsidiary of the company, has made a primary investment of Rs 100 crore in the equity share capital of Shivaliks Mercantile. The company will infuse the amount in two tranches.