By Dalal Street Investment Journal (DSIJ)
Another session, another comeback. Nifty slipped below 25,650 early, but buyers stepped in at lower levels and pushed the index above the 50 DMA into the close. Participation remained broad-based, and volatility eased. On February 19, keep an eye on support at 25,753 and 25,550.
On Wednesday, the Nifty 50 opened near the 50 DMA resistance, but bulls could not clear this hurdle in early trade. That kept traders cautious, and profit booking emerged, with higher volumes seen in the first hour. The index slipped below the 25,650 level. However, as in the last couple of sessions, the Nifty 50 recovered from the day’s low and settled near the day’s high. With this move, it closed in the green for the third straight session and finished above 25,800, clawing back around 175 points from the intraday low.
From a technical perspective, the day’s action formed a green-bodied candle with a long lower shadow, suggesting buying interest at lower levels. For the third consecutive day, the index also closed above the previous day’s high, a strong bullish signal that keeps the higher high and higher low structure intact.
Encouragingly, the index managed to end above the 50-DMA on late buying. Market breadth was strong, with broad-based participation as most sectoral indices finished higher. India VIX fell more than 3%, indicating easing fear and a risk-on tone. If global cues remain supportive, there is an expectation that the rally could extend in the coming sessions.
The positive price action was supported by volumes that were above average and higher than the previous session. A close near the day’s high on higher volume points to firm momentum. The Nifty 50 is currently trading above its key moving averages, namely the 20, 50, 100 and 200 DMA. On the hourly chart, it closed above the moving average ribbon, while the MACD is near the zero line, which is a bullish sign. On the daily timeframe, the MACD line has moved above the zero line and is diverging from the signal line, reflecting strengthening momentum. The 14-period daily RSI is around 54, also indicating improving momentum. On the upside, the immediate target could be 26,009, the swing high recorded on February 11.
On the other hand, a close below the 50 DMA at 25,753 would be a negative development. Below 25,753, the index could test 25,550. As long as the index does not show signs of weakness, the bias remains positive. That said, protecting existing gains should take priority over chasing momentum.
SEBI Registered Research Analyst (INH000006396).
Founded in 1986, Dalal Street Investment Journal (DSIJ) brings decades of experience in India’s equity markets. DSIJ's research combines fundamental analysis with price action, guided by disciplined risk management and capital preservation. They follow a structured, data-driven approach designed to help investors and traders make informed decisions beyond short-term market noise.
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