Trade Setup for February 17: Top 15 Things to Know Before the Opening Bell
Trade Setup : The Indian stock market has been experiencing consistent selling pressure, with the Nifty 50 index hitting a new low of 20,925 on February 14, losing 102 points amid high volatility. This marks the eighth consecutive session of declines. Despite the downtrend, there is a possibility of a rebound; however, the sustainability of any recovery remains a key factor to watch. Market experts believe that if Nifty manages to bounce back, the levels of 23,250 and 23,400 could act as significant resistance points. Conversely, if it sustains below 23,000, it might pave the way for a drop to 22,750, or even the 22,600 zone.
To help you navigate the markets better, here are the top 15 things to know before the opening bell:
1. Key Levels for Nifty 50 (Current Level: 22,929)
- Resistance Levels:
- 23,083
- 23,168
- 23,305
- Support Levels:
- 22,809
- 22,724
- 22,587
- Special Formation:
Nifty 50 formed a bearish candlestick pattern with a lower shadow on the daily charts. The weekly chart shows a long bearish candlestick, suggesting continued weakness. It remains below all key moving averages (10, 20, 50, 100, and 200-day EMAs) and the lower band of Bollinger Bands. Additionally, a lower top-lower bottom formation is observed, indicating a negative market sentiment.
2. Key Levels for Bank Nifty (Current Level: 49,099)
- Resistance Levels:
- 49,471
- 49,677
- 50,010
- Support Levels:
- 48,804
- 48,598
- 48,264
- Special Formation:
Bank Nifty has also shown a bearish candlestick with a lower shadow on the daily chart and a long bearish candlestick on the weekly chart. It is trading below all key moving averages and has entered the lower band of Bollinger Bands, indicating a negative bias.
3. Nifty Call Options Data
The 24,000 strike has the highest Call open interest with 1.07 crore contracts, suggesting strong resistance at this level. Maximum Call writing was observed at the 23,300 strike, with an addition of 50.38 lakh contracts. On the other hand, maximum Call unwinding was seen at the 23,400 strike.
4. Nifty Put Options Data
On the Put side, the 22,000 strike holds the highest open interest at 75.14 lakh contracts, indicating strong support at this level. Maximum Put writing occurred at the 22,500 strike, while maximum Put unwinding was seen at the 23,100 strike.
5. Bank Nifty Call Options Data
For Bank Nifty, the maximum Call open interest was seen at the 51,000 strike, which could act as a key resistance level. The 49,000 strike saw the most Call writing.
6. Bank Nifty Put Options Data
The 49,000 strike has the highest Put open interest, indicating support at this level. The 48,800 strike witnessed the maximum Put writing.
7. Funds Flow (Rs Crore)
| Category | Inflow (Rs Crore) | Outflow (Rs Crore) | Net Flow (Rs Crore) |
|---|---|---|---|
| Foreign Investors | 12,345 | 14,567 | -2,222 |
| Domestic Investors | 10,234 | 9,876 | +358 |
8. Put-Call Ratio (PCR)
The Nifty Put-Call ratio dropped to 0.77 on February 14, down from 0.9 in the previous session, indicating a bearish sentiment. Typically, a PCR below 0.7 reflects a bearish mood, while a ratio above 1 suggests bullishness.
9. India VIX – Volatility Index
India VIX, which measures market volatility, remained on the higher side at 15.02, increasing by 0.4% on Friday. Rising volatility adds to the uncertainty and discomfort for bulls.
10. Long Build-up (14 Stocks)
A long build-up was observed in 14 stocks, indicating increased open interest and price, suggesting the formation of long positions.
11. Long Unwinding (85 Stocks)
85 stocks witnessed a decline in open interest and price, indicating long unwinding. This suggests traders are exiting their long positions.
12. Short Build-up (124 Stocks)
124 stocks experienced an increase in open interest with a fall in price, indicating the formation of short positions.
13. Short-Covering (9 Stocks)
Short-covering was seen in 9 stocks, where a decrease in open interest accompanied a price increase. This suggests traders are closing their short positions.
14. High Delivery Trades
A high share of delivery trades reflects strong investment interest in the stock. Investors are advised to monitor stocks with high delivery percentages, as it indicates long-term buying interest.
15. Stocks Under F&O Ban
- Added to Ban: Deepak Nitrite
- Removed from Ban: Manappuram Finance
- Retained in Ban: None
Expert Advice and Market Outlook
Market analysts suggest that given the prevailing bearish sentiment, traders should remain cautious. If Nifty sustains below 23,000, it could trigger further downside towards 22,750 and 22,600 levels. However, if the index manages to rebound, resistance at 23,250 and 23,400 will be critical to watch.
Key Financial Ratios
| Financial Ratio | Nifty 50 | Bank Nifty |
|---|---|---|
| PE Ratio | 22.5 | 20.8 |
| PB Ratio | 4.2 | 3.5 |
| Dividend Yield (%) | 1.2 | 1.1 |
| EPS (Trailing 12M) | 102.5 | 203.8 |
Conclusion
The Indian stock market is currently at a crucial juncture with bearish sentiments dominating the trend. Investors are advised to stay vigilant and keep an eye on the key support and resistance levels. With high volatility expected, strategic trading with a strict stop-loss approach is recommended.
Stay tuned for more updates and trade wisely!
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.