The Nifty index recently saw a 1000-point rise from 24,500, with this move correctly predicted by Elliott Wave analysis. The US-India Trade Deal played a role in this surge, considered both a fundamental trigger and part of a technical setup.
Wave Patterns in Key Stocks
Tata Steel and KNR Constructions were analysed in terms of their wave patterns. Insights are offered on whether it’s time to take profits or continue to invest, with predictions provided for the following days. Elliott Wave Theory experts constantly keep watch, assessing potential future targets for Nifty and Bank Nifty.
Other market movements include EUR/USD consolidating above 1.1800 as traders await Eurozone data. USD/JPY strengthened due to political uncertainties in Japan. Gold prices have recovered above $4,950 following a previous sell-off, with safe-haven demand bolstered by US-Iran tensions.
In the crypto market, Ripple is slightly down, trading just under $1.60. The broader market has been in decline since January 2025. FXStreet remains a source of information for financial updates, without providing investment advice, highlighting the inherent risks in open market investments.
We correctly identified the reversal from the 24,500 bottom, and the subsequent 1,000-point rally confirms a strong impulsive move is underway. This suggests the market has started a new bull run, moving beyond a simple technical bounce. For derivative traders, this means shifting from a defensive to an offensive posture in the coming weeks.
The Impact of the US-India Trade Deal
The recent US-India Trade Deal is providing the fundamental thrust for this technical setup. This positive sentiment is backed by a recent surge in Foreign Institutional Investor (FII) inflows, which topped $6 billion in January 2026, a sharp reversal from the net outflows we saw in the final quarter of 2025. This fresh capital, combined with a manufacturing PMI that has held firmly above 57, indicates strengthening economic momentum that supports higher index levels.
Given this strong upward momentum, traders should consider buying Nifty call options with strike prices of 26,000 and 26,500 for the February and March expiries. For those holding futures, this is a time to ride the trend rather than book profits. The clear breakout suggests that pullbacks will likely be shallow and present further buying opportunities.
However, significant geopolitical risks remain, as seen with gold prices holding near $4,985 due to ongoing US-Iran tensions. Prudent traders should therefore hedge long portfolios by purchasing out-of-the-money Nifty put options, such as the 25,000-strike puts. This provides a cost-effective safety net against any sudden, sharp market reversals caused by external shocks.
Looking at volatility, the India VIX has cooled from its late 2025 highs but remains above its historical average, making outright long options relatively expensive. This environment makes bull call spreads an attractive strategy, as they cap the maximum loss and reduce the impact of high implied volatility. We anticipate volatility will continue to soften as the Nifty marches towards its next major targets, further benefiting net long option positions.
