Trade Setup for Sept 27: NIFTY50 bullish momentum hinges on weekly close above 26,000

Asian markets update

The GIFT NIFTY is up 0.5%, indicating a gap-up start for the NIFTY50 today. Meanwhile, the Asian markets are trading in green. Japan’s Nikkei 225 is up 0.7% as the investors assessed the release of latest inflation report which eased to 2.2% from August’s 2.6%.

The Hong Kong’s Hang Seng index jumped over 2% after China's leadersship signalled their intention to revive the economy with new pledges to increase fiscal spending, improve the real-estate crisis and support the stock market.

U.S. market update

Dow Jones: 42,175 (▲0.6%) S&P 500: 5,745 (▲0.4%) Nasdaq Composite: 18,190(▲0.6%)

U.S. indices ended the Thursday’s session in the green following the release of strong economic data. GDP growth for the second quarter came in at 3%, according to the third estimate, above the average annual GDP growth of 2.3% from 2018 to 2023.

In addition, the latest weekly unemployment report showed that initial jobless claims came in at 2,18,000, almost 6,000 below expectations.

NIFTY50

October Futures: (▲0.1%) Open Interest: (▲22.1%)

The NIFTY50 index moved out of its three day consolidation and extended the bullish momentum for the sixth consecutive day. The index the September series of its futures and options contracts on the positive note and ended above the 26,200 mark, led by strong buying in metals and automobile stocks.

On the weekly chart, the index has rallied 6% in last three weeks and has formed three strong bullish candles in a row. It is currently forming a bullish candle on the weekly chart and implying a close above previous week’s high. In this scenario, traders can closely monitor the price action around weekly close. A close above the 25,850 and 26,000 zone will signal continuation of the bullish momentum, while a close below this zone will imply weakness and consolidation in the coming week.

The technical structure on the daily chart remains bullish with index forming a base around 25,850 and 25,950 zone, which will act as immediate support for the index. Unless index slips below this zone, the trend may remain bullish.

BANK NIFTY

October Futures: (▲0.0%) Open Interest: (▲25.6%)

The BANK NIFTY also extended its gains and closed in the green for the second day in a row and formed a bullish candle on the daily chart. After consolidating and taking a pause for three days, the index resumed its upward momentum, ending the day at fresh record high.

The technical structure of the BANK NIFTY on the weekly chart suggests that the bullish momentum may continue, especially if it closes above the previous week's high. However, it's worth noting that the index has already gained over 8% in the past three weeks and is currently consolidating at higher levels. In this context, traders will want to watch the weekly close closely. A close above the 54,000 level would reinforce the bullish trend, while a close below it could indicate a potential sideways movement in the coming sessions.

On the daily chart, the index has maintained its higher high and higher low structure and has not formed a reversal signal. For the upcoming sessions, the index has immediate support around 53,700 zone and the crucial support is around its previous all-time high, 53,300 area. However, traders should avoid fresh long position as the risk reward has turned unfavourable. In case of retracement, traders can monitor the price action around crucial support zones and plan strategies accordingly.

FII-DII activity

Stock scanner

Long build-up: Maruti Suzuki, Samvardhana Motherson, Vedanta, Steel Authority of India and Shriram Finance

Short build-up: Crompton Greaves, Havells India and Bharat Forge

Under F&O ban: NIL

Out of F&O ban: Aditya Birla Fashion and Retail, Granules India, Hindustan Copper, Vodafone-Idea and Indian Energy Exchange

In Futures and Options or F&O, long build-up means an increase in Open Interest (OI) along with an increase in price, and short build-up means an increase in Open Interest(OI) along with a decrease in price.

Source: Upstox and NSE.

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