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The Indian equity market experienced a significant surge on February 4th, fueled by positive global cues and a strong recovery in US futures following a pause in tariff decisions. This positive sentiment translated into a robust opening for the Nifty 50 index, which displayed an upside gap of 150 points. The market maintained its upward trajectory throughout most of the trading session, with intraday dips being met with buying pressure. This resulted in the Nifty 50 closing at a one-month high, marking its best day since the first week of January. The Sensex mirrored this positive performance, gaining 1397 points to close at 78,584, while the Nifty rose 378 points to reach 23,739. This significant rally pushed both indices into positive territory for 2025, with gains of nearly 2% each.
The market breadth was remarkably positive, with broad-based gains across various sectors. Over 40 stocks closed higher, contributing to a market capitalization increase of over ₹5 lakh crore for BSE-listed companies. Energy, banking, and metals sectors led the charge, demonstrating strong investor confidence across multiple sectors. The participation extended beyond large-cap stocks, with the Nifty Midcap 100 and Smallcap 100 indices recording gains of 1.56% and 1.09%, respectively. Public sector enterprises displayed exceptional strength, with the Nifty PSE index advancing by 2.72% to close at 8,944.55. This strength was further reflected in the PSU Bank and Infrastructure indices, which recorded gains of 2.41% and 2.40%, respectively. The robust market performance was also supported by a significant shift in foreign institutional investor (FII) sentiment. After 23 consecutive sessions of net selling, FIIs turned net buyers on Tuesday, purchasing shares worth ₹809 crore. This marked the first instance of net buying since January 2nd, signaling a potential turning point in foreign investment flows. Domestic institutional investors (DIIs) also continued their buying spree, purchasing shares worth ₹431 crore, further bolstering the market's upward momentum.
Technical analysts provided further insights into the market's upward trajectory. LKP Securities' Rupak De highlighted the Nifty's upward movement following a falling wedge pattern retest, suggesting a potential for a sustained rally in the short term. The index's sustained position above the critical 21EMA on the daily timeframe and the bullish crossover and rising RSI (Relative Strength Index) after forming a base further solidified this positive outlook. De predicted that the index might move towards 24,050 and potentially higher levels in the short term, while identifying support levels at 23,500 and 23,250. Nagaraj Shetti of HDFC Securities offered a similar perspective, suggesting that Monday's swing low at 23,222 could represent a new higher bottom within a bullish chart pattern, negating previous bearish signals. Shetti emphasized the sharply upward short-term trend of the Nifty, anticipating a potential move towards the upper 24,000 levels, with immediate support at 23,550. The Nifty Bank index also demonstrated impressive strength, closing at 50,157.95, a 1.93% surge that reclaimed the psychologically important 50,000 level after a period of consolidation. The formation of a robust bullish candle on the daily chart signaled renewed strength and a sustained position above its 20-day moving average (DMA). Om Mehra of SAMCO Securities pointed out immediate support at 48,500 and resistance at 50,820, aligning with the 50% Fibonacci retracement level.
Source: Trade Setup for February 5: Will Nifty move towards 24,050 and higher now?