Trade Setup for February 7: Key Market Trends and Strategies to Navigate Nifty & Bank Nifty
Trade Setup for February 7: The Indian stock market experienced a subdued session on February 6, with the Nifty 50 closing lower amid cautious sentiment ahead of the RBI Monetary Policy Committee (MPC) meeting on February 7. The index declined by around 0.4%, reflecting the consolidation phase. While the broader trend remains positive, traders should be prepared for further volatility.
A crucial support zone exists at 23,400-23,450, with an extended floor at 23,200—a break below this could disrupt the ongoing higher high-higher low formation. On the upside, 23,800 remains a critical resistance, with 24,000 being the next milestone if bullish momentum strengthens.
To help traders navigate the market, here are 15 key insights into the trade setup for February 7:
1) Nifty 50 Key Levels (23,603)
- Resistance Levels: 23,727, 23,779, 23,862
- Support Levels: 23,561, 23,510, 23,427
Technical Outlook: The Nifty 50 formed a bearish candlestick pattern on the daily chart while managing to stay above short-term moving averages. The 50-week EMA at 23,430 remains an important support zone.
2) Bank Nifty Key Levels (50,382)
- Resistance Levels: 50,516, 50,611, 50,765
- Support Levels: 50,208, 50,112, 49,958
- Fibonacci Resistance: 51,153, 51,939
- Fibonacci Support: 47,875, 46,078
Technical Outlook: Bank Nifty showed resilience, ending 0.08% higher despite some selling pressure at higher levels. It remains near the upper Bollinger Band, with momentum indicators supporting the bullish sentiment.
3) Nifty Call Option Data
- Highest Open Interest (OI): 24,500 strike (49.54 lakh contracts)
- Key Resistance Levels: 24,000 and 24,500
- Strongest Call Writing: 24,500, 23,600, and 24,600
4) Nifty Put Option Data
- Highest OI: 23,600 strike (28.94 lakh contracts)
- Key Support Levels: 22,700, 23,000, and 23,600
- Strongest Put Writing: 23,600, 22,700, and 23,700
5) Bank Nifty Call Option Data
- Highest OI: 52,000 strike (17.8 lakh contracts)
- Strong Resistance Levels: 50,500, 51,000, 52,000
- Most Call Writing: 50,500, 52,000, and 51,000
6) Bank Nifty Put Option Data
- Highest OI: 49,000 strike (13.9 lakh contracts)
- Key Support Levels: 49,500, 50,000, and 50,500
- Strongest Put Writing: 50,500, 50,000, and 50,300
7) Institutional Flows (Funds Flow in ₹ Crore)
- Domestic institutional investors (DIIs) and foreign institutional investors (FIIs) have been actively trading, impacting market direction.
8) Put-Call Ratio (PCR)
- The Nifty PCR dropped to 0.95 from 0.97, indicating balanced market sentiment. A ratio above 1 suggests bullish sentiment, while below 0.7 signals bearish trends.
9) India VIX – Market Volatility
- India VIX rose by 0.66% to 14.18, indicating moderate market uncertainty. Despite the slight increase, volatility remains manageable for bulls.
10) Stocks Witnessing Long Build-up (27 Stocks)
- Stocks that saw increased OI and price gains, indicating a bullish outlook.
11) Stocks Witnessing Long Unwinding (50 Stocks)
- These stocks saw a drop in OI and price, indicating profit-booking in long positions.
12) Stocks Witnessing Short Build-up (122 Stocks)
- Stocks that saw an increase in OI and price decline, signaling a bearish sentiment.
13) Stocks Witnessing Short-covering (32 Stocks)
- These stocks experienced OI reduction and price rise, suggesting short-covering.
14) High Delivery Volume Stocks
- These stocks recorded high delivery percentages, signaling long-term investment interest rather than short-term trading.
15) F&O Ban List
- No stocks were added, retained, or removed from the F&O ban list for February 7.
Conclusion
The Indian stock market remains in a consolidation phase ahead of the RBI MPC decision. While the Nifty 50 struggles to gain strong upward momentum, the Bank Nifty has shown resilience. Traders should keep an eye on key support (23,400-23,450) and resistance (23,800-24,000) levels while monitoring institutional flows and volatility trends.
Stay cautious, follow technical levels, and be prepared for potential swings as the market reacts to the RBI policy outcome.
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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.