Trading Plan: Will Nifty defend 25,400, Bank Nifty sustain above 60,500 amid consolidation?

NIfty Trading Plan for February 20

• Nifty snapped its three-session recovery streak, witnessing aggressive and broad-based selling pressure
• Nifty formsa bearish engulfing candle and reinforcing range-bound action with active bulls and bears at both ends
• Bank Nifty retains superior relative strength versus Nifty 50

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Bears have taken charge of the market, dragging the Nifty 50 decisively below all key moving averages (except the 200 DEMA) and close to Monday's low. Momentum has weakened, and the VIX spiked above the 13 zone. If the Nifty 50 fails to defend the 25,400–25,350 zone, the 25,300–25,200 range (200 DEMA and 200 SMA) cannot be ruled out in the next few sessions. However, holding above this zone could possibly take the index toward the 25,500–25,600 range. Meanwhile, the Bank Nifty needs to defend Thursday's low (60,592) for a rebound toward the 61,000–61,200 zone, but a fall below this level could drag the banking index down toward 60,500–60,300, according to experts.

On February 19, the Nifty 50 tanked 365 points (-1.41 percent) to 25,454, while the Bank Nifty slipped 811 points (-1.3 percent) to 60,740. Bears dominated market breadth, with about 2,235 shares witnessing selling pressure against 687 advancing shares on the NSE.

Nifty Outlook and Strategy

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

The Nifty snapped its three-session recovery streak, witnessing aggressive and broad-based selling pressure that decisively shifted momentum in favour of the bears. The index breached the crucial 25,500 support level, disrupting its higher-low structure and exposing the key 25,300–25,350 demand zone, which now acts as the immediate make-or-break region. A sustained move below this band could accelerate long unwinding.

Technically, the index has slipped below its 10- and 20-day EMAs, indicating weakening short-term momentum, while 25,600 has emerged as a strong resistance zone. In the derivatives space, heavy Call writing at 25,800 suggests capped upside potential, whereas 25,000 Put open interest provides a near-term cushion. The bias remains “sell on rise” unless 25,600 is reclaimed decisively.

Key Resistance: 25,550, 25,650, 25,800

Key Support: 25,350, 25,230, 25,100

Strategy: Traders may consider the Bear Call Spread for the February 24 expiry by selling one lot of 25,200 CE at Rs 286 and buying one lot of 25,450 CE at Rs 127. This setup is designed to capitalize on potential downside momentum.

Stop-Loss: Hold this strategy strictly, with the maximum Mark-to-Market (MTM) loss capped at Rs 5,941 to ensure disciplined risk management.

Target: Hold this strategy, aiming for a maximum Mark-to-Market (MTM) profit of Rs 10,309, while considering profit booking once MTM gains exceed Rs 6,000.

Jay Mehta, Technical Research at JM Financial Services

The Nifty formed a bearish island reversal pattern last week (February 9–12 candles isolated by gaps on both sides), establishing a firm ceiling that has repeatedly capped upside attempts. On February 16, a strong bullish engulfing candle appeared at lower levels, providing solid downside support. In the latest session, the price was rejected at 25,850, forming a bearish engulfing candle and reinforcing range-bound action with active bulls and bears at both ends.

A decisive breakout in either direction is expected to unleash a significant move. The current defined range is 25,320–26,090. The bias leans mildly negative unless 26,090 is broken convincingly on the upside.

Key Resistance: 25,550, 25,700, 25,850

Key Support: 25,320, 25,000, 24,640

Strategy: Maintain a mildly negative bias; initiate shorts only on a breakdown below 25,320. After the breakdown of 25,320, rallies up to 25,700 could be viewed as selling opportunities, with a stop-loss at 25,940, targeting 25,000 and 24,640.

Sumeet Bagadia, Executive Director at Choice Broking

From a technical perspective, immediate resistance is placed in the 25,800–25,900 zone, while crucial support is seen in the 25,200–25,250 range.

The daily RSI, currently at 45.60, reflects weakening momentum, while a 10.12 percent surge in India VIX to 13.46 signals rising market uncertainty and growing nervousness among participants. On the derivatives front, significant Put writing is visible at the 25,400 strike, with heavy Call writing at the 25,600 strike, defining a near-term consolidation range. As long as Nifty futures continue to close below 25,500, a “sell on rise” strategy remains technically valid, with a strict stop-loss placed at 25,750.

Key Resistance: 25,800, 25,900

Key Support: 25,200, 25,250

Strategy: Sell Nifty Futures on a rise near the 25,500 level, targeting 25,200–25,250, with a stop-loss of 25,750 on a closing basis.

Bank Nifty - Outlook and Positioning

Jay Mehta, Technical Research at JM Financial Services

The Bank Nifty retains superior relative strength versus the Nifty but has developed a double-top pattern near the 61,700–61,765 zone (first top on the trade deal announcement, second at the latest session high). The latest candle delivered a strong bearish engulfing pattern, signaling early exhaustion at highs. The price remains above key EMAs, and momentum indicators stay in bullish territory; however, price action shows fading upside momentum.

Upside is capped at the strong resistance of 61,765. The defined range is 59,700–61,765. A decisive break either way will dictate the next directional move. The bias is mildly negative unless 61,765 is reclaimed decisively.

Key Resistance: 61,160, 61,765

Key Support: 60,300, 59,940, 59,700

Strategy: Hold existing longs with a stop-loss at 60,400, and initiate shorts only on a breakdown below 59,700 with a stop-loss at 60,500, targeting 59,250 and 59,000. If 61,765 breaks decisively on the upside, bullish momentum could resume.

Sumeet Bagadia, Executive Director at Choice Broking

The Bank Nifty clearly indicated a shift toward bearish sentiment and selling dominance. From a technical perspective, immediate resistance is placed in the 61,000–61,100 zone, while the 60,200–60,100 band continues to act as a crucial support area for maintaining near-term stability.

The daily RSI, currently at 55.53, reflects weakening momentum despite remaining in the neutral-to-positive zone. As long as Bank Nifty futures sustain below 60,700 on a closing basis, a selective “sell on rise” strategy remains technically valid, with a strict stop-loss placed at 61,200.

Key Resistance: 61,000, 61,100

Key Support: 60,200, 60,100

Strategy: Sell Bank Nifty Futures on a rise near the 60,700 level, targeting 60,200–60,100, with a stop-loss of 61,200 on a closing basis.

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

Nifty Bank witnessed sharp distribution after failing to sustain near record highs, reversing recent gains and slipping below the critical 61,000 mark. The move confirms a developing double-top pattern and weakens the short-term structure. Immediate support lies in the 60,600–60,500 zone, aligned with the 10-day EMA; a breach could intensify selling pressure toward the 60,000 psychological level.

On the upside, 61,200 has emerged as firm resistance. Derivatives positioning reflects caution, with aggressive Call writing at 61,000 capping rallies, while 60,500 Put open interest offers near-term support. The bias remains tilted lower, favouring a sell-on-strength approach.

Key Resistance: 61,000, 61,200, 61,400

Key Support: 60,500, 60,300, 60,100