NIFTY Index Chart Analysis

The Nifty 50 index, after marking a swing high of 26,341 following the euphoric move on the India-U.S. trade deal announcement, retraced about 50 per cent of the upmove from the Budget Day low to the high registered post the India-U.S. trade deal. The biggest headline during the last fortnight that impacted sentiment was the sharp sell-off in IT stocks.[EasyDNNnews:PaidContentStart]

IT stocks came under heavy selling pressure, reflecting growing fears that AI will structurally disrupt business models, pricing power, and long-term growth visibility for IT services companies. The sell-off was so sharp that the Nifty IT index, so far in February, is down by over 14 per cent, marking its highest fall in February since 2012. All 10 constituents of the Nifty IT index are currently trading below their long-term moving average of the 200-DMA.

After correcting about 970 points from the recent swing high, the Nifty 50 index formed a Bullish Engulfing candle at an important zone, close to the 20-day moving average and the 50 per cent Fibonacci retracement of the rally from the Budget Day low to the post India-U.S. trade deal high. Currently, the index trades below the 50 and 100-DMAs, while it remains above the 20 and 200-DMAs. This clearly indicates that the trend has been unclear in recent times. Hence, making money for traders has not been easy.

The broader structure continues to show a market in a medium-term uptrend, but currently undergoing a corrective phase within that trend. On the weekly chart, the Nifty has slipped below its 20-week moving average (25,743). The price action over the past several weeks resembles a mild distribution phase near the recent highs.

The weekly RSI stands at 52 in neutral territory; there is no visible bullish or bearish divergence against the price at this point. The weekly MACD remains above the zero line but is below its signal line, indicating a loss of upward momentum.

On the upside, only a decisive move back above 25,765–26,070 would negate the immediate weakness and restore directional strength. Closing above the 26,070 level on the weekly timeframe would open the gates for 26,300–26,400 on the upside. On the downside, the important support lies in the 25,400– 25,500 zone. A failure to hold above this support level would trigger a decline to the 24,900 level.

Given this setup, a measured and stock-specific approach is advisable. Traders should avoid aggressively taking fresh long positions until the index either reclaims the 50-DMA at 25,765 decisively or retests and stabilizes around the 25,400–25,500 support zone. Protection of existing gains should take precedence over chasing momentum. The coming fortnight demands disciplined risk management and selective participation rather than broadbased aggressive positioning.

STOCK RECOMMENDATIONS
ASTRAL LIMITED .................................. BUY ....................... CMP ₹1,640.20
BSE Code : 532830
Target 1 .... ₹1,740 
Target 2 ..... ₹1,830 
Stoploss....₹1,575 (CLS)

Established in 1996, Astral Limited has grown into one of India’s leading building materials companies, with a diversified presence across essential Construction and infrastructure product categories. Initially focused on pipes and fittings, the company has systematically expanded its portfolio over the years to include adhesives, sealants, water storage solutions, bathware, valves, paints, construction chemicals, and infrastructure products.

The stock has broken out of a 49-week consolidation. It formed higher lows and closed above the previous parallel highs. The volume was higher and above average. It is well placed above all key averages, in the desired sequence. The Bollinger Bands are expanding. The stock is trading 12.79 per cent above the 50-DMA. The moving average ribbon is in an uptrend. The MACD histogram shows strong bullish momentum. The RSI is in the strong bullish zone. The KST and Stochastic RSI are both bullish. The Elder Impulse System has formed a strong bullish bar.

In short, the stock has broken out of an ascending base, following a long consolidation. It has met our earlier targets. A move above ₹1640 is positive, and it could test ₹1740-1830. Maintain a stop loss at ₹1575.

KIRLOSKAR OIL ENGINES LIMITED ..................... BUY ........... CMP ₹1,412.40
BSE Code : 533293
Target 1 ...... ₹1,550
Target 2 ..... ₹1,630 
Stoploss.....₹1,320 (CLS)

Kirloskar Oil Engines Limited is part of the Kirloskar Group. Its portfolio includes a wide range of engines designed for gensets and industrial applications across sectors such as construction, Railways, marine, Defence, and agriculture, among others. In addition, the company offers pumps, farm mechanization equipment, motors, and allied products to meet diverse customer requirements.

The stock has broken out of a seven-week cup pattern with a strong bullish candle. It gained 17.88% last week, with higher volume, indicating fresh buyers' interest. It closed near the all-time high. Its Relative Strength Line is at a new high, indicating outperformance relative to the broader market. The stock is well placed above all key averages. The Bollinger Bands are expanding after a period of contraction. The stock is trading 15.61 per cent above the 50-DMA. The moving average ribbon is in an uptrend. The MACD is bullish, and the histogram shows strong momentum. The 14-period daily RSI is in the bullish zone and trending upwards. The KST and Stochastic RSI are both bullish. The Elder Impulse System has formed a strong bullish bar.

In short, the stock has registered a bullish breakout. The stock could reach levels of ₹1550, followed by ₹1630. Maintain a stop loss at ₹1320.

[EasyDNNnews:PaidContentEnd] [EasyDNNnews:UnPaidContentStart]

[EasyDNNnews:UnPaidContentEnd]