Trade Setup for February 19: Nifty's key levels to watch for potential correction

The Nifty 50 index faced another day of volatility, struggling to find clear direction. Despite this, it managed to maintain support at the crucial 22,800 level, bouncing off an intraday low of 22,801 to recover 170 points by the afternoon session.

The market closed slightly lower, with the Nifty ending the day down by 14 points or 0.06% at 22,945. The sectoral performance was mixed, with FMCG and auto stocks taking a hit, while IT stocks saw decent gains. Broader indices underperformed, dipping between 0.4% and 2%.

Sector Performance and Key Stocks:

IT stocks, led by Tech Mahindra and Persistent Systems, saw buying interest due to positive sentiment.

Power-related stocks such as NTPC and Power Grid also showed upward momentum.

Bharti Airtel remained flat despite a ₹8,500 crore stake sale by its promoter entity. Bharti Telecom Ltd, the company's promoter, acquired 1.2 crore shares in the process.

In terms of investments, both foreign and domestic investors were active, with foreign investors buying ₹4,786.56 crore and domestic investors adding ₹3,072.19 crore in equities.

Nifty50 Technical Outlook:

According to Rupak De of LKP Securities, as long as the Nifty remains below 23,150, it might continue its 'sell on rise' trend. The immediate support level is at 22,800, and a break below this could lead to further correction. Resistance is seen at 23,000.

Ajit Mishra of Religare Broking noted that while the Nifty is stabilizing near the January low of 22,800, broader market weakness remains a concern. A breakout above 23,140 could lead to a bullish shift, but until then, the market remains cautious.

Om Mehra from SAMCO Securities mentioned that a shift from a 'sell on rise' strategy to 'buy on dip' could occur if the market breadth improves, especially if support at 22,780 holds.

Nifty Bank Outlook:

The Nifty Bank ended lower at 49,087.30, down 0.35%. The index seems to be forming a base around the 49,000 level, which may signal a slowdown in downside momentum.

A breakout above the 20-day moving average (DMA) at 49,800 could shift the momentum in favor of the bulls. However, the index still has not confirmed a definitive bottom, and support at 48,500 remains critical for downside risk.

Stocks to Watch for February 19:

L&T: Acquired the remaining 26% stake in L&T Special Steels and Heavy Forgings, making it a wholly owned subsidiary.

Concor: Awarded ₹689.76 crore order to Braithwaite & Co for 30 BLSS Rakes.

RVNL: Received Letter of Award (LoA) worth ₹554 crore from Rail Infrastructure Development Company, Karnataka.

Aurobindo Pharma: The US FDA concluded a pre-approval inspection with 5 observations at the company's unit in Parawada Mandal, Andhra Pradesh.

Mahindra Lifespaces: Partnered with Livingstone Infra for ₹1,650 crore Mahalaxmi Redevelopment Project.

Piramal Pharma: The US FDA issued a Form 483 with 6 observations after a General GMP inspection at the company’s Turbhe facility.

Transformers and Rectifiers: Secured an order worth ₹166.5 crore from Hyosung T&D India.

The outlook for the Nifty remains cautious as key levels are tested, and further developments in broader market indices and stock-specific news will shape the trading sentiment for February 19.