*Index Observation*
Nifty ended half a percent higher after facing supply near to its previous day's high while the index continues to consolidate near to its 200 DMA support. Any rebound from current levels is likely to face resistance near the 25,700 zone. A decisive close above this level would be required to trigger fresh upside momentum. On the downside, yesterday’s low of 25,325 is expected to act as a strong near-term support. For the current weekly expiry, the index is likely to remain range-bound between 25,325 and 25,700 as markets move ahead in the final expiry month of the fiscal.
On a week to date basis Bank Nifty continued to outperform the Nifty and has formed an inside bar formation in Wednesday’s session. For the past 5 sessions the index has closed above its previous day’s low reflecting underlying strength after three consecutive weekly closes at lifetime highs. On the short-term hourly chart, the index has signaled a minor breakdown as we had highlighted yesterday. However, this can be negated if Bank Nifty sustains trade above 61260 in today’s session. From here, a broader trading range is likely to develop, with 60500 acting as support on the downside and 61750 as resistance on the upside.
BSE Sensex weekly expiry is scheduled for today followed by a weekly and monthly closing on charts due tomorrow. Do note that this week's Nifty - weekly expiry has been preponed to Monday - 2nd of March due to a trading holiday on Tuesday.
*Interesting Observation*
Range-Bound Index, Improving Breadth: Early Signs of Internal Strength?
The Indian equity market has been consolidating within a broad range for over three months. While the headline index remains directionless, select market breadth indicators are showing steady improvement.
The percentage of stocks trading above their 200-DMA has risen to ~33% from lows near 20%, and the number of stocks making fresh 52-week lows has declined sharply. This indicates that even as the index remains under pressure, selective stocks are witnessing improving participation and internal strength.
Although this divergence does not guarantee an immediate uptrend, confirmation through a breakout above key medium-term resistance remains crucial. Improving breadth alongside such a breakout could pave the way for a more sustained rally rather than an extended range-bound phase.
With the index currently oscillating between 25,300 and 25,900, a stock-specific and selective approach is advisable. However, a decisive move above 26,000 could act as a trigger for a sustained upward trend.
*DERIVATIVES | Trade Setup*
Cash Market Activity
FII: ₹ 2,991 crore
DII: ₹ 5,118 crore
*Week-to-Date (WTD)*
FII: ₹ 6382 crore
DII: ₹ 6,987 crore
*Month-to-Date (MTD)*
FII: ₹ 4,361 crore
DII: ₹ 21,098 crore
*F&O Cues*
FII stance on index futures were neutral yesterday. They have added 2k long contracts. Their net position on index futures stands at 104k short contracts.
In the options segment, the 25200 strike to act as support, while the 25800 strike remains a key resistance
