Trade Setup for Feb 04: Nifty 50 Eyes Crucial Support as Volatility Continues

The Nifty 50 enters Wednesday’s session facing a cautious outlook following a historic yet volatile Tuesday performance. After a massive 1,000-point gap-up opening triggered by the lowering of U.S. tariffs on India, the index settled over 600 points higher, closing above the 25,600 mark. Despite this bullish reversal—where the Nifty 50 successfully moved above its 20, 50, and 200-day Exponential Moving Averages (EMAs)—GIFT Nifty futures suggest a weak start for February 4, indicating a potential drop of roughly 60 points at the open amid mixed global cues.

Market experts emphasize that the key objective for the bulls today is to maintain the index above the 20-day EMA to sustain the current momentum toward the 26,000 level. Technical data reveals strong resistance near 26,300, where selling pressure emerged in the previous session. Options data for the February 10 expiry reinforces this, showing the highest Call Open Interest at 26,000, while the 25,500 Put strike serves as the immediate support zone. With Foreign Institutional Investors (FIIs) recently turning net buyers, traders are watching closely to see if the broad-based recovery in sectors like infrastructure and auto can withstand near-term profit-taking.