Week Ahead

The market closed the week on a negative note amid rangebound and volatile trading on February 21, continuing downtrend for second consecutive week. Trump administration's announcement of reciprocal tariffs and FOMC minutes signalling pause in further rate cuts citing inflation risk ahead along with persistent FII selling weighed on the market sentiment.

The Nifty 50 fell 0.6 percent to 22,796, and the BSE Sensex declined 0.8 percent to 48,981, however, there was strong buying interest in broader markets after recent steep fall, with the Nifty Midcap 100 and Smallcap 100 indices rising 1.7 percent and 1.5 percent, respectively. Auto stocks were under pressure on fear of increasing competition due to likely entry of Tesla, and reciprocal tariffs fear dampened sentiment in pharma counters. FMCG, and IT stocks were also in red, but metal stocks were shining.

The market's mood remains cautious, with pessimistic sentiments likely to linger until there is a marked improvement in corporate earnings and a conducive environment with easy global liquidity and stabilised currency.

Technically, the trend is looking weak given the Nifty 50 traded near the lower band of Bollinger bands along with below key moving averages (10, 20, and 50-week EMAs) and continuation of lower tops-lower bottoms formation for another week. The momentum indicators RSI and MACD also showed negative bias. The 22,600 (the trendline support) can act as a support in the near term as below it 22,000 (100-week EMA) being a major support, however, in case of rebound, 23,000-23,100 is acting as a stiff resistance as above this zone, 23,400 (10-week EMA) is the possible level to watch.

The options data suggest that the Nifty 50 is expected to be in the broad range of 22,200-23,500 for the monthly F&O expiry week and the immediate range could be 22,500-23,100.