Trade setup for 18 April: NIFTY50 forms doji near 50-DMA, key levels to watch on expiry

Asian markets update 7 am

Indian equities may start the day flat as indicated by the GIFT NIFTY. Other Asian markets are also mixed. Japan's Nikkei 225 is down 0.3%, while Hong Kong's Hang Seng Index is flat with a negative bias.

U.S. market update

U.S. stocks declined on Wednesday amid a sell-off in technology stocks due to uncertainty of the timing and the magnitude of interest rate cut by the U.S. Federal Reserve. Meanwhile, the Fed Chairman Jerome Powell in an event said that the recent data releases has not given the confidence and it will take longer than expected to get inflation down to 2%.

The Dow Jones slipped 0.1% to 37,753, while the S&P 500 ended 0.5% lower at 5,022. The tech-heavy Nasdaq Composite led the losses and declined 1.1% to 15,683.

NIFTY50

April Futures: 22,200 (▼0.6%)

Open Interest: 2,20,691(▼5.0%)

The NIFTY50 extended its decline into the third day and closed below its important 50-day moving average (DMA). A sharp rise in U.S. bond yields and ongoing tensions between Israel and Iran dampened investor sentiment.

However, on the daily chart, the index has formed a doji candle near its 50-DMA support zone, indicating indecision on the part of investors. The doji is a neutral candlestick pattern, a close below or above the price of the doji will provide investors with clear directional clues about the trend.

For today's expiry, we have highlighted the high and low of the doji candle formed on the hourly chart of the NIFTY50 on the 16 April. A break of the high and low of this candle on a closing basis will give traders further clues.

The options setup for today’s expiry has significant open interest at 22,500 and 22,600 call option strikes. Conversely, the put base is accumulated at 22,000 and 22,200 strikes. As per the options data, traders are expecting NIFTY50 to trade between 21,900 and 22,400.

BANK NIFTY

April Futures: 47,660 (▼0.2%)

Open Interest: 1,22,025 (▼1.0%)

The BANK NIFTY also extended its bearish move and briefly dropped below its 20-DMA. However, after a gap-down start, the index traded in a defined range and protected the 20-DMA on a closing basis.

After dropping nearly 3% in three trading sessions, the index may again face resistance in the 48,200-48,500 region, highlighted in the red zone below. However, with HDFC Bank's results due on the 20 April (Saturday), traders are advised to monitor the price action and execute their strategies accordingly.

The initial open interest build-up for the monthly expiry (24 April) of BANK NIFTY has significant call option base at 48,000 and 49,000 strikes. On the flip side, the put options contracts are established at 47,500 and 47,000 strikes.

FII-DII activity

Foreign Institutional Investors (FIIs) remained net sellers for the third day in a row and sold shares worth ₹4,468 crore. On the other hand, the Domestic Institutional Investors (DIIs) purchased shares worth ₹2,040 crore. To track the ratio of long and short open positions of FIIs in the index, log in to https://pro.upstox.com/ ➡️F&O➡️FII-DII Activity➡️FII Derivatives

Stock scanner

Long build-up: HDFC AMC, Samvardhana Motherson and Cummins India

Short build-up: Mphasis, Infosys, Gujarat Gas, LTIMindtree, Punjab National Bank, Wipro and Idea

Under F&O ban: Balrampur Chini, Bandhan Bank, Gujarat Narmada Valley Fertilizers (GNFC), Hindustan Copper, Idea, Metropolis, National Aluminium, Piramal Enterprises, Steel Authority of India and Zee Entertainment

Out of F&O ban: Exide Industries and India Cements

To access a specially curated smartlist of most traded and active stocks, as well as the OI gainers and losers, simply log in: https://pro.upstox.com/ ➡️F&O➡️Options smartlist/Futures smartlist

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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