Asian Markets Show Mixed Signals; U.S. Indices Head Higher

As of 7 AM local time, Asian markets displayed varied performance, reflecting the complexities of the global financial landscape. The GIFT NIFTY was up by 0.23%, standing at 23,804, while the Nikkei 225 also gained 0.23%, reaching 38,922. Conversely, the Hang Seng index saw a slight decline of 0.06%, closing at 20,585.

U.S. Market Update: Indices Close in Positive Territory

The U.S. markets concluded trading on Wednesday with positive momentum. The Dow Jones Industrial Average ended at 44,873, up by 0.7%, while the S&P 500 and Nasdaq Composite saw increases of 0.3% and 0.1%, respectively, closing at 6,061 and 19,692.

This upward trajectory was largely driven by a sharp drop in Treasury yields, which fell to their lowest point since mid-December. The bond market experienced a significant rally following announcements from the U.S. government regarding its debt issuance strategy. The government indicated it would not accelerate the pace of borrowing, alleviating fears surrounding increasing costs associated with rising interest rates.

In the technology sector, however, the day was mixed. Shares of Alphabet, Google’s parent company, plummeted nearly 7% after it reported fourth-quarter cloud revenue that fell short of market expectations. Despite this setback, the broader technology sector found foothold, particularly with Nvidia, which experienced a rally following Alphabet’s disclosure of plans to invest $75 billion in capital expenditure by 2025.

NIFTY50 Update: Gains Encounter Resistance

The NIFTY50 index experienced a momentary setback on February 5, despite early trading that pushed past the significant resistance level of 23,800. Profit-booking at higher levels led to a consolidation phase, with the index broadly ranging within 100 points as traders prepared for the weekly options expiry.

Technically, the NIFTY50’s outlook remains optimistic, with immediate support visible around its 21-day exponential moving average (EMA). Analysts noted that a decisive closing above the 23,800 threshold could trigger renewed upward momentum for the index. Current data indicates immediate resistance around the 23,800 zone, while support can be tracked at approximately 23,500, setting the stage for potential directional movements.

The open interest observations for the upcoming February 6 expiry revealed a significant accumulation of calls at the 24,000 strike, signifying resistance. In contrast, the put base at the 23,500 strike suggests a firm support level for the index.

SENSEX Activity and Insights

The SENSEX traded in a relatively narrow band on February 5, breaking briefly above the 78,700 mark before ultimately sliding into negative territory due to profit-taking activities. The day’s price maneuver resulted in a pause candle on the daily chart, typically indicating a phase of consolidation post an upward trend.

Despite the recent struggles, the technical outlook for the SENSEX remains favorable. The 21-day EMA currently offers immediate support, and as long as the index stays above this crucial level on a closing basis, the positive trend is expected to persist. Looking ahead, the 80,000 zone will represent a significant barrier to overcome.

FII-DII Activity: Institutional Insights

In recent trading sessions, Foreign Institutional Investors (FIIs) resumed a trend of selling, offloading equities worth ₹1,682 crore. This move was countered by Domestic Institutional Investors (DIIs), who ramped up buying, purchasing shares totaling ₹996 crore in the cash market.

Traders can access detailed data regarding the ratio of long and short open positions held by FIIs in the index through platforms such as Upstox.

Stock Scanner: Trends and Patterns

Several stocks showed notable trading activity, indicating long and short build-ups. Long builds were observed in Union Bank, Abbott India, Angel One, Glenmark Pharmaceuticals, and Apollo Hospitals. Meanwhile, Godrej Properties, Asian Paints, Page Industries, Torrent Power, and Phoenix Mills exhibited signs of short builds.

In terms of futures contracts, State Bank of India, HDFC Bank, Titan, Bajaj Finance, and Asian Paints were among the most actively traded. For options contracts, notable activity was seen in Bajaj Finance 8500 CE, Kalyan Jewellers at both 600 CE and 580 CE, Titan 3500 PE, and BSE 5700 CE.

Conclusion

It is crucial for traders navigating the current market landscape to fully understand the risks associated with derivatives trading. As the markets continue to exhibit volatility and various trading patterns emerge, informed decision-making will remain essential for navigating future opportunities. For real-time insights, traders can log into the Upstox platform for a curated list of active securities and further analytics on open interest shifts.

Disclaimer: Trading in derivatives should only be conducted by those who understand the associated risks and implement strict risk management strategies. This report provides information for consumption by clients and should not be redistributed. No specific stock recommendations are made within this article.