_Morning Snippet :- 20th February 2025_ *Index Observation* Nifty made a fresh 8 month low in opening trade for this week but managed to recover as its 5 year trendline support continues to reel in range of 22650 – 22800. The index has ended its 8 day losing streak at the start of this week. This was Nifty’s 6th attempt in a span of 3 weeks wherein it has traded between or near to this support band and attempted to reverse. Bands mentioned above continue to hold on for this week session as well, fresh breakdown of cup and handle pattern on sustaining below 22780 while short covering could pick up only above 23150. Bank Nifty outperformed Nifty ahead of Nifty’s weekly expiry session and is forming a piercing pattern on weekly charts wherein the weekly candle broke below its previous weeks low but reversed to pierce higher within its previous candle’s body. Thus signalling a rejection to trade lower. Bank Nifty as well continues to trade largely in the band of 48800-49800 for the past 7 sessions. Sustained trade on either side is likely to allow for a fresh 1000 pt move. BSE Sensex did not make a fresh swing low diverging from the Nifty’s formation at the start of this week. Last Friday’s high and low points of 75400 - 75600 are set to act as trigger points for the index for a directional move. Nifty’s weekly expiry session is scheduled for today. *Interesting Observation* Smallcaps Poised to Outperform Nifty 100 The chart presented shows the performance of Nifty 100 stocks relative to Smallcap 100 stocks. Since the Indian market bottomed out in 2020, Smallcap 100 stocks have significantly outperformed Nifty 100 stocks. This sustained outperformance led to a downward trend in the Nifty 100 to Smallcap 100 ratio. Within this broader downtrend, there have been brief counter-trend rallies, but they were short-lived. At the beginning of 2025, the ratio once again turned higher, resulting in a 20% rally. This led to a period of significant underperformance for small-cap stocks relative to Nifty 100. However, the ratio has now encountered resistance, supported by three key technical observations on the chart: 1. Trendline Resistance – The ratio has approached a key resistance level. 2. Bearish Engulfing Pattern – A reversal pattern indicating potential downside. 3. Failure to Break Previous Swing High – Suggesting a loss of upward momentum. These factors indicate a high probability that the ratio will turn lower from here, leading to a renewed phase of outperformance for Smallcap 100 stocks against Nifty 100. While the recent uptrend in the ratio was short-term, the broader trend of small-cap strength appears likely to resume. *DERIVATIVES* *Index IV* *NIFTY:* IV : 12.56 IVP : 73.6 IVR : 46.12 *BANKNIFTY:* IV : 14.7 IVP : 72.4 IVR : 35.3 *Trade Setup* Activity in Cash Market FII Cash: -1881.3 Crs. DII Cash: 1957.74 Crs. *WTD* FII: -1032.57 Crs. DII: 9789.7 Crs. *MTD* FII: -30216.0 Crs. DII: 35808.77 Crs. *F&O CUES* FIIs stance on index futures were neutral in the previous session. They have added 1K long contracts. FIIs net position on index futures now stand at 185K short contracts. On the option front, 22500 strike will continue to act as support as this strike has significant put open interest. On the upside, 23500 strike has significant call open interest and therefore will act as resistance. *New 52 Week High Low Data* *Large Cap:* New 52 Week Highs: 3 New 52 Week Lows: 1 *Mid Cap:* New 52 Week Highs: 0 New 52 Week Lows: 13 *Small Cap:* New 52 Week Highs: 0 New 52 Week Lows: 23 *NIFTY500:* New 52 Week Highs: 3 New 52 Week Lows: 37