Trade setup for Budget session: NIFTY50 reclaims 21 EMA, will it sustain the bullish momentum?

U.S. market update

• Dow Jones: 44,544 (▼0.7%)
• S&P 500: 6,040 (▼0.5%)
• Nasdaq Composite: 19,627 (▼0.2%)

U.S. indices ended the Friday’s session lower after the reports from the White House confirmed that the President Donald Trump planned to implement the tariffs on Canada, Mexico and China on Saturday.

The White House Press Secretary Karoline Leavitt announced that the President plans to impose a 25% tariff on goods from Mexico and Canada, along with a 10% tariff on Chinese imports. Meanwhile, on social media, Donald Trump warned BRICS nations that they would face 100% tariffs if they replace the U.S. dollar with a joint currency or an alternative.

NIFTY50

• February Futures: 23,620 (▲0.9%)
• Open interest: 2,36,997 (▲2.7%)

The NIFTY50 index extended the positive momentum for the fourth consecutive day and reclaimed the crucial resistance level of 23,350 and 21-day exponential moving average (EMA). The sharp gains came ahead of the announcement of the Union Budget as the index witnessed broad-based buying across sectors.

However, the broader technical structure of the index still remains weak. If the index sustains the close above the 21-day EMA and the crucial resistance zone of 23,350, then it may further extend its gains. However, a close below these levels and rejection from 50-day and 200-day EMA will signal weakness. For directional clues, traders can monitor these crucial levels as a close above or below these levels will provide further insights.

BANK NIFTY

• February Futures: 49,862(▲0.3%)
• Open interest: 1,03,670 (▲6.3%)

The BANK NIFTY index also extended the winning momentum for the fourth-consecutive session ahead of the announcement of the Union Budget and ended the 31 January’s session tad below the crucial resistance zone of 49,700.

As per the daily chart, the BANK NIFTY index reclaimed the 21-day EMA but failed to capture the immediate resistance zone of 49,700 on closing basis. For the near-term clues, traders can monitor the crucial resistance zone of 49,700 and 21-day EMA. If the index sustains the crucial levels on the Budget day on a closing basis, then the index may further extend its gains. However, a rejection from 50-day and 200-day EMA and a close below 21 EMA, will signal weakness.

FII-DII activity

Stock scanner

• Long build-up: UPL, Navin Fluorine and ITC
• Short build-up: Bank of Baroda and Syngene International
• Under F&O ban: Nil

In Futures and Options or F&O, long build-up means an increase in Open Interest (OI) along with an increase in price, and short build-up means an increase in Open Interest(OI) along with a decrease in price. Source: Upstox and NSE.

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