Trade Setup for August 21: Nifty bulls hope for sentiments to favour them on weekly expiry

After showing a sustained upmove with range-bound action on Tuesday, the benchmark Nifty 50 index continued to inch higher amidst similar consolidation on Wednesday, closing the day in the green.

The market opened on a negative note but began recovering from the lows early in the session. A gradual upmove followed in the mid-part of the day, while the market largely consolidated towards the end.

The Nifty rose for a fifth consecutive session, gaining 70 points to close at 25,051, ahead of the release of the FOMC meeting minutes later today. This marks the first close above the 25,000 level since July 24, 2025.

Leading the gains among the Nifty constituents were IT heavyweights Infosys and TCS, along with Nestle. Conversely, it was a challenging session for stocks like Bharat Electronics (BEL), Shriram Finance, and Bajaj Finance, which ended as the top losers within the Nifty pack.

Among sectoral indices, Nifty IT, FMCG, and Realty emerged as major gainers. In contrast, Nifty Media, Pharma, and Financial Services were the top underperformers.

The positive momentum extended to the broader market as well, with both the Nifty Midcap 100 and Nifty Smallcap 100 indices rising for the third straight session. The Nifty Midcap 100 gained 0.46%, while the Nifty Smallcap 100 rose 0.30%.

Selective defence stocks saw gains after the government approved the Indian Air Force’s plan to acquire 97 LCA Tejas Mark 1A fighter jets worth Rs 62,000 crore. On the other hand, gaming stocks came under pressure after the Union Cabinet cleared the Online Gaming Bill, which proposes a complete ban on all real money games.

Overall, the near-term market outlook remains positive, supported by government policy initiatives and improving consumption trends. However, investors remain watchful of global cues, sectoral rotations, and key macroeconomic data, including the India and US Manufacturing and Services PMI, due Thursday.

Global cues were weak, as investors turned cautious ahead of Fed Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday.

According to Nagaraj Shetti of HDFC Securities, the short-term trend for the Nifty remains positive. A further upside could take the index toward the next overhead resistance at 25,300, with immediate support seen at 24,900.

Rupak De of LKP Securities said that the Nifty witnessed a largely positive session, closing above the key 25,000 mark. He said sentiment is likely to favour the bulls, as the index has sustained above the 21-EMA for the past three sessions.

Additionally, Put writers have outnumbered Call writers for the first time in several sessions. As long as the Nifty holds above 24,800, the trend is expected to remain "buy on dips." On the upside, resistance is placed at 25,250, above which the index could extend its rally toward 25,500, he added.

Nandish Shah of HDFC Securities sees the next resistance levels for the Nifty at 25,160 and 25,355. The support for the Nifty has now shifted up to 24,852.

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