Trade setup for Feb 20: NIFTY50 defends 22,700 for fifth session, extends consolidation

Asian markets @ 7:00 am

GIFT NIFTY: 22,896 (▼0.27%)

Nikkei 225: 38,698 (▼1.24%)

Hang Seng: 22,615 (▼1.44%)

U.S. market update

Dow Jones: 44,627 (▲0.1%)

S&P 500: 6,144 (▲0.2%)

Nasdaq Composite: 20,056 (▲0.0%)

U.S. indices closed higher on Wednesday, with the S&P 500 hitting a fresh record high. Investors assessed the impact of a newly announced 25% tariff on automobile, chip, and pharmaceutical imports while also parsing the Federal Reserve minutes for policy cues. The minutes revealed that central bank officials favored keeping rates at restrictive levels amid concerns over persistent inflation.

NIFTY50

February Futures: 22,964 (▼0.1%) Open interest: 2,22,131 (▼0.7%)

After a negative start, the NIFTY50 recouped all of its opening losses in the first half of the session and surpassed the previous session's high and the 23,000 level in the course of the day. However, the index failed to sustain the gains at higher levels amid heavy selling pressure in the index's heavyweight technology stocks. It closed flat for the second consecutive day, signaling consolidation for the index around the 23,000 level.

From a technical perspective, the NIFTY50 has been consolidating between 23,300 and 22,700 for the past four trading sessions. Within this range, the index may remain range-bound and volatile. In the meantime, positional traders can monitor this range on a close basis. A close above or below this area will provide further clues.

The open interest data for today's expiry showed a significant call option build-up at the 23,100 strike, suggesting resistance for the index around this area. On the other hand, put bases were observed at the 22,700 and 22,500 strikes, suggesting support for the index around these levels.

SENSEX:

Max call OI: 76,000 Max put OI: 76,000 (20 Strikes from ATM, Expiry: 25 Feb)

The SENSEX also attempted to reclaim the psychological level of 76,000 during intraday but failed to sustain the crucial level on the closing basis. Amid sharp volatility during the session, the index failed to sustain its first session gains and ended the session on a flat note for the second consecutive day.

As highlighted on the chart below, the index took support in the zone of 75,200 and 75,600 zone for the fifth time in last six trading sessions. If the index ends below this zone on closing basis, it may further extend weakness. Meanwhile, the resistance for the index remains around the 77,000 zone, coinciding with its 21-day exponential moving average.

FII-DII activity

Stock scanner

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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