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Trade setup for Feb 14: More downside likely in Nifty50? Check out key market cues before Monday’s session

Trade setup for Feb 14: More downside likely in Nifty50? Check out key market cues before Monday’s session

Trade setup for Feb 14: More downside likely in Nifty50? Check out key market cues before Monday’s session
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By Sandeep Singh  Feb 14, 2022 7:59:32 AM IST (Updated)

Trade setup for Monday, February 14: The Nifty50 appears to be in a consolidation phase and needs to break out on either side, say experts. Here's what the technical charts suggest for the coming session.

Indian equity benchmarks ended a three-day winning run on Friday amid weakness across global markets, after an alarming US inflation reading triggered fears of aggressive rate hikes.

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Both indices declined nearly one percent lower last week, following gains of more than two percent in the Budget week.
What do the charts suggest for Dalal Street now?
The Nifty50 has formed a long bear candle on the daily chart, which is a bearish pattern, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities. He believes one may expect more weakness in the short term.
On the weekly chart, the index formed a reasonable negative candle with upper and lower shadows, suggesting the bulls' inability to sustain the highs, which could open more weakness in the near term, he said.
Sideways to negative trend
The 50-scrip index has made a red-body candle on the daily timeframe, once again slipping below its 50-day exponential moving average, said Rupak De, Senior Technical Analyst at LKP Securities.
"The trend appears to be sideways to negative for the near term. On the lower end, support is visible at 17,250-17,265... The Nifty needs to move beyond 17,640 to change the current bearish trend," he said.
Here are key things to know about the market before the February 14 session:
SGX Nifty
At 7:59 am on Monday, Singapore Exchange (SGX) Nifty futures were down 224 points or 1.3 percent at 17,130, suggesting a gap-down opening ahead on Dalal Street.
Global markets
Equities in other Asian markets fell on Monday as warning Russia could invade Ukraine at any time sent oil prices to a seven-year high. MSCI's broadest index of Asia Pacific shares outside Japan was down 1.4 percent at the last count.
Japan's Nikkei 225 and Hong Kong's Hang Seng indices were down 1.3 percent each. China's Shanghai Composite was down 0.3 percent. South Korea's KOSPI was down two percent and Singapore's Straits Times half a percent.
S&P 500 futures were flat. On Friday, Wall Street indices tumbled. The S&P 500 fell 1.9 percent, the Dow Jones 1.4 percent and the technology stocks-heavy Nasdaq Composite 2.8 percent.
What to expect on Dalal Street
HDFC Securities' Shetti is of the view the Nifty50 is poised for more downside towards 17,000 levels this week, with immediate resistance placed around 17,460. Overall chart patterns suggest chances of a minor upside bounce from the lows and the probability of a deep cut in the market in the near term, he said.
The index is making a lower-highs-and-higher-lows structure, and appears to be consolidating within a symmetrical pattern, according to Ruchit Jain, Lead Research at 5paisa.com.
"On a broader timeframe, this is seen as a time-wise correction where we could see buying interest on declines and selling pressure at higher levels... The support end of the triangle pattern would be seen around 17,130-17,150 resistance at 17,570-17,600," he said.
Jain believes it is the time to be stock-specific as the market continues directionless moves until a clear breakout from the current consolidation. This week, he expects the Nifty to stay rangebound, with only a breakout on either side leading to the next directional move.
Key levels to watch out for
Hem Securities' Head-PMS, Mohit Nigam, pointed out the following levels:
IndexImmediate resistanceImmediate support
Nifty5017,45017,250
Nifty Bank38,80038,200
FII/DII activity
In contrast to the trend lately, foreign institutional investors (FIIs) net purchased Indian equities worth Rs 108.5 crore on Friday but net sales by domestic institutional investors (DIIs) stood at Rs 696.9 crore, according to provisional exchange data.
FIIs have been withdrawing funds from Indian shares and DIIs buying for the past few weeks.
Call/put open interest
Exchange data shows the maximum call open interest is accumulated at the strike price of 18,000, with nearly 91,200 contracts, and the next highest at 17,500, with around 73,500 contracts. On the other hand, the maximum put open interest is placed at 16,500, with 63,700 contracts, and the next highest at 17,000, with 63,000 contracts.
This suggests immediate resistance at 17,500 followed by the 18,000 hurdle, and immediate meaningful support at 17,000.
Long build-up
Here are three stocks that saw an increase in open interest as well as price, suggesting a build-up of long positions:
SymbolCurrent OICMPPrice change (%)OI change (%)
CUMMINSIND19,47,600931.950.63%8.69%
LAURUSLABS50,29,200551.21.56%1.07%
IGL1,85,44,625391.650.28%0.60%
Long unwinding
SymbolCurrent OICMPPrice change (%)OI change (%)
PFC4,44,35,400121.8-0.20%-22.13%
COROMANDEL12,70,625784.4-2.57%-13.28%
FEDERALBNK8,21,60,000102.85-1.58%-7.53%
INDUSTOWER97,83,200252.45-0.49%-7.30%
PVR25,77,9381,631.95-2.29%-6.80%
(Decrease in open interest as well as price)
Short-covering
SymbolCurrent OICMPPrice change (%)OI change (%)
PETRONET1,88,16,000223.151.48%-9.44%
BHARATFORG58,14,000731.850.22%-5.04%
AUROPHARMA1,37,72,250698.152.14%-4.88%
INDUSINDBK2,53,32,300979.150.63%-4.71%
NTPC5,05,98,900136.70.04%-4.30%
(Increase in price and decrease in open interest)
Short build-up
SymbolCurrent OICMPPrice change (%)OI change (%)
POWERGRID2,68,72,987202.45-2.48%17.96%
TATACHEM61,54,000913.5-5.03%15.03%
CROMPTON27,58,800383.35-3.77%13.84%
MOTHERSUMI1,54,59,500172.25-4.68%13.00%
MANAPPURAM1,80,84,000151.85-4.56%10.45%
(Increase in open interest and decrease in price)
52-week highs
Four stocks in the BSE 500 basket hit 52-week highs: Hindalco, Mahindra Lifespace, GNFC and Rhi Magnesita.
52-week lows
MRF, GIC, Bajaj Consumer Care, Akzo Nobel, Solara Active Pharma, Zydus Wellness, Sequent Scientific and Jubilant Pharmova were among the 12 stocks that hit 52-week lows.
Volatility gauge
NSE's India VIX index -- which measures the expectation of volatility in the market -- rose 5.5 percent to 18.7 on Friday, its second highest jump for the week.
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