Trade Setup for February 17: Nifty's critical levels and market outlook

The Indian equity market witnessed its eighth consecutive day of decline, marking its longest losing streak in two years. The downturn has been driven by persistent foreign institutional investor (FII) outflows, alongside growing concerns over potential retaliatory tariffs from the United States.

Market Performance: On Friday, the Nifty 50 index faced resistance at the 23,200 mark and experienced high volatility, eventually closing below 23,000. Despite an intraday recovery, the index ended lower by 102 points at 22,929.25. This sharp decline has pushed the total market capitalization of BSE-listed companies to its lowest level in eight months, falling below ₹400 lakh crore for the first time since June 2024. In dollar terms, the valuation dropped to a 15-month low.

Sector Performance: The broader market saw significant losses, with the Nifty Midcap 100 falling by 7.38% and the Nifty Smallcap 100 dropping by 9.41%. The Small Cap 250 and Micro Cap 250 indices both plummeted by 10%. The market was broadly negative, with 44 of the 50 Nifty stocks posting losses, including notable decliners like Eicher Motors, Hero MotoCorp, Bharat Electronics, and Adani Enterprises.

Outlook for February 17: Analysts are focusing on crucial support levels for the Nifty. The index is currently hovering around the 22,800 level, which is a critical support. A decisive break below this level could trigger further panic, with the next significant downside target being around 22,450 (based on the 20-month EMA). On the upside, resistance lies at 23,100, with potential respite above this level. According to market experts, volatility is expected to persist, driven by external factors like US tariffs and continued FII outflows, as well as subdued corporate earnings.

Stocks to Watch:

BHEL: Awarded a Letter of Intent (LoI) for an EPC package for the Singareni Thermal Power Project worth ₹6,700 crore.

Alembic Pharma: Received Establishment Inspection Report (EIR) from the US FDA for its Vadodara-based facility.

Zydus Lifesciences: US FDA completes inspection of its Ambernath API Manufacturing site with no observations.

Aditya Birla Fashion: Recorded a net loss of ₹51.3 crore, an improvement from the previous year's loss of ₹77.9 crore.

Utkarsh Small Finance Bank: Reported a net loss of ₹168 crore, with a rise in gross and net NPAs.

Wipro: Appointed Amit Kumar as managing partner and global head of Wipro Consulting, effective immediately.

The Nifty 50 faces a critical juncture at 22,800. If the index breaks below this level, it could open the door for further declines. The market will continue to monitor foreign investment flows, external geopolitical factors, and earnings recovery to gauge the next move.