Trade Setup for March 7: Bulls' optimistic; ₹12 lakh crore added in investor wealth

The Nifty index has recently shown signs of recovery, surging past key levels. With 22,500 conquered, the bulls are optimistic, having added ₹12 lakh crore in investor wealth over the last two sessions. However, as the market moves higher, the pressing question remains: have the bears exhausted their selling strength, or are they waiting for higher levels to short the index?

Positive triggers, including the RBI's liquidity infusion, falling crude oil prices, and a cooling US Dollar, contributed to the Nifty's recent rally. The index saw a strong contribution from heavyweight stocks like Reliance Industries, with a potential 36% upside, lifting the overall market sentiment.

As the market eyes its next move, Nifty's immediate resistance lies at the 22,700 level, which also aligns with the 20-DEMA. Beyond that, 22,800 could be the next challenge. On the upside, the Nifty's momentum could extend towards the 22,750-22,800 range. For now, support holds at 22,250, and market sentiment remains bullish as long as the index stays above this threshold.

In terms of sector performance, the Nifty Bank remains an underperformer compared to the broader market, with resistance around 48,660. For a breakout, the index needs to sustain above 48,660, targeting the 49,000 mark.

F&O Cues:

Fresh long positions were seen in stocks like KPIT Tech, IIFL Finance, and Hindalco, signaling bullish sentiment.

Fresh short positions were visible in stocks like Trent, Coforge, and BSE, indicating bearish outlook.

Short covering was observed in stocks like NALCO, Deepak Nitrite, and Asian Paints, signaling a potential reversal in trend.

Stocks to Watch for March 7:

Bharat Electronics: Bags orders worth ₹577 crore, adding to its strong order inflow for FY25.

Laurus Labs: Invests ₹833 crore in KRKA Pharma.

Kalpataru Projects: Wins ₹2,306 crore in new orders, strengthening its order intake for FY25.

RVNL: Wins orders worth ₹156.35 crore.

RITES: Secures orders worth ₹27.96 crore from South Central Railway.

Brigade Enterprises: Launches ₹1,700 crore residential project in Chennai.

Biocon: Collaborates with Civica to expand Insulin Aspart access in the US.

With these developments, Friday's session will be key in determining whether the bulls can maintain control or if the bears will make their move.