Trade Setup for February 21: Nifty Remains Rangebound Amid Global Uncertainties

Trade Setup for February 21: Nifty Remains Rangebound Amid Global Uncertainties

The Indian stock market is wrapping up a lackluster week, with the Nifty confined to a narrow 300-point range. Despite multiple attempts by bulls to defend the 22,800 level, there has been no sustained buying to push the index meaningfully beyond 23,000.

Lack of Momentum on Expiry Day Thursday’s session mirrored the rest of the week’s dull action. Even with the usual volatility expected on weekly options expiry, the market remained flat after an initial gap-down opening was quickly bought into. However, there was minimal movement in either direction, leading to another subdued close.

Over the past five trading sessions, the Nifty has ended with a negligible change of 0.1% or less in four instances. Adding to the bearish sentiment, the index has closed in the red for 11 out of the last 12 sessions. Market sentiment remains cautious due to concerns over potential Trump-era tariffs, fund outflows from India to China, and persistent worries in the auto sector, all of which have kept bulls from taking charge.

Even Nomura’s Saion Mukherjee has set a wide year-end target for the Nifty, predicting it could fall to 21,800 or rally to 25,700—a 12% potential upside from current levels.

FMCG Sector’s Prolonged Losing Streak The FMCG sector, which briefly rallied after tax-related announcements in the Union Budget on February 1, has now witnessed its longest losing streak on record. The index has declined for 14 consecutive sessions, erasing nearly ₹3 lakh crore in market capitalization.

Broader Markets Outperform One silver lining has been the resilience in midcap and smallcap stocks. Both indices outperformed the benchmark on Thursday and have been stronger throughout the week.

Nifty 50: Flat for the week so far.

Nifty Midcap: Up 3%, on track for its best week since December.

Nifty Smallcap: Up 2%, also set for its best week in months.

Key Technical Levels to Watch

Rupak De (LKP Securities): Nifty remains in a range with support at 22,800 and resistance at 23,150. A breakout in either direction could trigger a decisive move.

Osho Krishnan (Angel One): 23,000 is a critical resistance level, and sustained buying is needed to push the index toward 23,200-23,400.

Nagaraj Shetti (HDFC Securities): A sustained move above 23,100 could confirm a short-term bottom reversal, potentially leading to further upside in the coming sessions.

Nifty Bank’s Performance Despite a strong rally on Wednesday, the Nifty Bank index gave up nearly half of its gains on Thursday. However, it remains 0.5% higher for the week, outperforming the Nifty and positioned for its third weekly gain in four weeks.

Dhupesh Dhameja (SAMCO Securities): 50,000 remains a major resistance level with aggressive call writing. A buy-on-dips approach is advised, with key support at 48,600.

Hrishikesh Yedve (Asit C. Mehta Investment Intermediates): A move above 49,650 could take the index back to 50,000, while 48,800 will act as strong support.

F&O Data Insights

Nifty February Futures: Open interest declined by 1.6% (2.7 lakh shares), with the premium narrowing from 31.6 to 29.35 points.

Put-Call Ratio: Improved to 0.9 from 0.8.

Manappuram Finance: Remains in the F&O ban.

Options Activity for February 27 Expiry:

Call OI Additions: 22,900-23,500 range.

Put OI Additions: 22,200-22,900 range.

Conclusion: The Nifty remains trapped in a tight range, with 22,800 acting as a firm support and 23,000-23,150 serving as a crucial resistance zone. A breakout on either side could set the direction for the coming sessions. In the meantime, broader markets continue to show resilience, offering selective buying opportunities. Traders should adopt a cautious stance while monitoring key technical levels and global cues closely.

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