NIFTY OUTLOOK & OPTION CALL PUT TIPS FOR 21 FEB 2023

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Markets started the week subdued, falling over half a percent, continuing the recent decline. After the initial surge, the Nifty index gradually fell throughout the day, nearing the daily low. Ongoing pressures in the banking and finance sectors combined with a downtrend in energy companies set a negative tone. Meanwhile, the broader indices traded mixed, ending flat to marginally lower. Also, the derivatives contract's forthcoming monthly expiration in February would add to the volatility. Stocks take a beating ahead of Wednesday's Fed minutes release. The Fed maintains its inflation protection and is expected to remain hawkish. As expected, it shouldn't have a bad impact on the global stock market. However, the consequence of consistently high interest rates is causing demand and earnings prospects to slow, so the short-term trend will be cautious. The benchmark indices closed lower on February 20 on selling in all sectors except auto and IT names. At the close the Sensex was down 311 points at 60691 and the Nifty was down 99 points at 17844. Bears in Bank Nifty continued to attack higher levels and the index saw selling pressures throughout the day.

The trend remains negative and one should maintain a sell on rise approach as long as the index stays below the 41,500 level where most of the open interest is building on the call side. Next support is visible at 40,000 where some put percentage is visible. On the daily charts, the Nifty has returned to the downward sloping channel it broke out of last week. Looking at the hourly charts, we can observe that the Nifty closed below the main hourly moving averages, which is a sign of weakness in the short-term. Prices are moving along the lower Bollinger deferral band, which is stretching, suggesting the decline is likely to continue. Therefore, taking into account the above parameters, we change our near-term outlook for the Nifty to sideways. Consolidation range is likely to be around 18200 to 17800. In terms of levels, 17900-18000 should act as an immediate hurdle, while on the downside, 17600-17500, convincing with the 61.82% Fibonacci retracement level, will serve as crucial support to watch from a short-term perspective.

Resistance: 17900, 18000, 18100

Support: 17800, 17700, 17600