Indian Stock Market Outlook for February 20
The Indian stock market is poised for a challenging start on February 20, as benchmark indices Sensex and Nifty 50 are expected to open lower. This comes amid mixed global market cues and escalating tensions between the US and Iran. The GIFT Nifty indicates a tepid opening, trading around 25,415, which reflects a discount of nearly 30 points from the previous close of Nifty futures.
On February 19, the Indian stock market experienced a significant downturn, snapping a three-day winning streak. The Nifty 50 slipped below the crucial 25,500 level, while the Sensex declined by 1,236.11 points, or 1.48%, closing at 82,498.14. The Nifty 50 settled 365.00 points, or 1.41%, lower at 25,454.35.
In the derivatives segment, notable put writing at the 25,400 strike and heavy call writing at the 25,600 strike have established a defined short-term consolidation range. Analysts recommend that traders remain cautious near key support levels and wait for a decisive breakout above resistance points before initiating new positions.
Technically, the Nifty index formed a significant bearish candle on the daily chart, slipping below the lower boundary of the 25,500-26,000 consolidation range. This indicates a loss of short-term momentum. Nagaraj Shetti, a Senior Technical Research Analyst at HDFC Securities, pointed out that the formation of a ‘Bearish Engulfing’ pattern is concerning.
According to Shetti, a drop below 25,400 could lead Nifty down to the next support levels of 25,200 to 25,100. Nilesh Jain from Centrum Finverse noted that the Nifty 50 has fallen below its key short-term moving averages, suggesting a potential bearish reversal. Immediate resistance is at the 100-DMA near 25,700, with crucial support at the 200-DMA positioned at 25,310.
The Bank Nifty index also faced challenges, declining 811.25 points, or 1.32%, to close at 60,739.55 on February 19. This movement indicates a clear shift in momentum, suggesting bulls have temporarily lost control. The 20-day EMA between 60,400 and 60,300 is expected to act as a key support zone. A breakdown below this could lead to further declines.
Market analysts stress the importance of watching key levels and suggest that the Bank Nifty could trade within a range of 60,000 to 61,500 in the near term. A decisive breakout in either direction could trigger new momentum in the market.
As the market opens, increased volatility may be a concern. Investors are advised to remain vigilant and consult with certified experts before making any investment decisions.
