The stock market is buzzing with energy this Tuesday morning. A historic trade agreement between the United States and India has ignited investor sentiment and pushed the NIFTY50 into a strong bullish territory. GIFT NIFTY futures are already trading 100 points higher. This indicates a massive gap up opening for the Indian benchmark index. Traders are now eyeing the psychological 26,000 mark as the next big target.
Foreign investors have aggressively bought Indian stocks for the fourth straight day. This buying spree combined with positive global cues suggests the bulls are firmly in the driver’s seat. The big question for today is whether the index can sustain this momentum and close above the critical resistance levels.
Global Deal Fuels Market Optimism
Wall Street and Dalal Street are celebrating the finalisation of the new trade pact. This agreement is expected to boost export heavy sectors and improve trade balances. The immediate reaction was visible on Monday itself. The NIFTY50 surged nearly 0.6 percent to close above the 25,800 zone.
The optimism is not just sentiment based. Hard data supports this rally. Foreign Institutional Investors (FIIs) have turned net buyers with high conviction.
FII Buying Streak Details:
- Monday Inflow: ₹2,222 crore
- Streak: 4th consecutive session of buying
- Market Impact: Increased liquidity and short covering
When foreign money chases domestic stocks, it usually creates a strong floor for the market. Domestic investors are also finding confidence in this trend. The synergy between the trade deal news and FII flows has created a perfect storm for a rally.
However, not every stock participated in the joy ride on Monday. Several heavyweights dragged their feet.
Top NIFTY50 Laggards:
- Nestle India
- ONGC
- Infosys
- NTPC
- Coal India
- HDFC Bank
Traders should watch these counters closely today. If the broader market rallies, these underperformers might see value buying or short covering.
Technical Setup Signals Breakout
The technical charts are screaming bullishness. The daily chart of NIFTY50 formed a Hammer candlestick pattern on Monday. This is a classic bullish reversal signal.
A hammer forms when prices drop significantly during the day but buyers step in to push the price back up near the opening level. The long lower wick on yesterday’s candle shows that bears tried to drag the market down but failed. Bulls successfully defended the lower levels.
Key Technical Indicators:
| Indicator | Status | Implication |
|---|---|---|
| Candlestick | Hammer | Strong buying at lower levels |
| EMA Cross | 20 EMA crossing 50 EMA | Potential Golden Crossover |
| Trend | Upward | Buy on dips strategy favoured |
The chart also highlights a potential crossover. The 20 day Exponential Moving Average (EMA) is crossing the 50 day EMA from below. Technical analysts call this a bullish sign. It often precedes a sustained uptrend.
Important Support Levels:
The 50 EMA is currently placed at 25,658. This level will act as a rock solid support. As long as the index stays above this mark, the trend remains positive. Any dip towards this level might be used as a buying opportunity by aggressive traders.
Option Chain Data and Resistance
The derivative data for the February 10 expiry aligns with the bullish technical view. However, there are hurdles to cross.
The option chain data shows significant activity at round numbers. The highest Open Interest (OI) for Call options is built up at the 26,000 strike.
What does this mean?
Call writers believe that 26,000 will be a tough nut to crack. They have created a wall of resistance there. If the NIFTY50 manages to break past 26,000 and sustain there for 30 minutes, these call writers will be forced to cover their positions. This could trigger a massive short covering rally that pushes the index even higher.
On the downside, the Put writers are active at the 25,800 strike. This indicates that 25,800 is now a strong base. The market is unlikely to fall below this level easily today.
Trader’s Note: “Watch the opening hour carefully. If the NIFTY sustains the 100 point gap up, the shorts at 26,000 will start panicking. This is where the big move happens.”
The Put-Call Ratio (PCR) is also cooling off, suggesting there is still room for the market to go up before it becomes overbought.
Strategy for Tuesday Expiry
The setup for today is clear. The trend is up but volatility will be high due to the expiry session.
Bullish Case:
If the index opens above 25,900 and holds, the immediate target is 26,000. Traders will look for long entries on dips. The stop loss should be trailed strictly to protect profits.
Bearish Case:
A rejection from 26,000 could lead to profit booking. If the index slips below 25,800, the weakness might expand towards the 25,658 support zone. However, given the strong FII data and the US India trade deal news, deep corrections seem unlikely at this moment.
Traders should also keep an eye on the banking sector. HDFC Bank and Bajaj Finance were laggards yesterday. If they join the party today, the 26,000 level will likely be taken out easily. Conversely, strength in IT giants like Infosys is needed to support the index at higher levels.
The mix of strong global cues, FII buying, and a bullish hammer pattern makes this a “buy on dips” market. The 26,000 level is the final frontier for the bulls today.
The NIFTY50 is standing at the edge of a major breakout. Powered by the US India trade deal and relentless FII buying, the index looks ready to conquer new heights. While 26,000 remains a stiff resistance, the technical structure suggests the bulls have the ammunition to break through. Traders should stay alert and watch the price action near the resistance zone carefully.
