Trade setup for 9 April: NIFTY50 inches towards 23,000, BANK NIFTY forms doji pattern

Asian markets update 7 am

Indian equities are set for a positive start as the GIFTY NIFTY climbs 0.3%, surpassing the 22,800 mark. Other Asian markets are also trading higher. Japan's Nikkei 225 is up 0.6% and Hong Kong's Hang Seng Index is up 1.4%.

U.S. market update

U.S. stocks ended Monday's session flat as investors await the release of the Consumer Price Index on Wednesday. All three indices - Dow Jones, S&P 500 and Nasdaq Composite - closed flat.

NIFTY50

April Futures: 22,748 (▲0.6%)

Open Interest: 2,09,314 (▲8.0%)

The NIFTY50 extended its gains and broke out of its five-day consolidation. The index closed at a record high, above its previous all-time high and also above the immediate swing high (22,619), indicating a continuation of the positive momentum.

On the daily chart, the NIFTY50 is trading above all of its major daily moving averages (20 and 50) and has formed a bullish candle on the daily chart. Going forward, the index has immediate support at the 22,400 and 22,500 levels. However, according to experts, traders should keep a close eye on global cues, especially the release of inflation data from the U.S. and India later this week.

Open Interest (OI) build-up for the 10 April expiry shows a significant call base at 23,000 and 23,300 strikes. On the other hand, the maximum put base is at 22,500 and 22,600 strikes. Based on options data, traders expect the NIFTY50 to trade between 22,300 and 23,100.

BANK NIFTY

April Futures: 48,691 (▲0.0%)

Open Interest: 1,32,579 (▼4.0%)

The BANK NIFTY hit a new all-time high on the 8th April, forming a doji candle on the daily chart. However, after the positive start, the index traded in a range and ended the session flat.

With the formation of the doji candlestick pattern, investors have signalled indecision near the all-time high of the BANK NIFTY. As the doji is a neutral candlestick pattern, traders should keep a close eye on today's price action and close. A close above the doji could signal a continuation of the current trend, while a close below the doji would signal caution.

Meanwhile, the open interest data for the 10 April expiry shows a significant call options base at 49,000 and 48,500 strike. On the other hand, the put base is 48,000 and 48,500 mark. Based on the open interest, traders are eyeing BANK NIFTY’s trading range between 47,200 and 49,100 this week.

FII-DII activity

Foreign Institutional Investors (FIIs) turned net sellers and sold shares worth ₹684crore, while the Domestic Institutional Investors (DIIs) bought shares worth ₹3,470 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: Exide Industries, Info-Edge (Naukri), Laurus Labs, Mahindra and Mahindra and NMDC

Short build-up: REC, Granules and SUN TV

Under F&O ban: Bandhan Bank, Steel Authority of India and Zee Entertainment

Out of F&O ban: Hindustan Copper

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.

Disclaimer: Derivatives trading must be done only by traders who fully understand the risks associated with them and strictly apply risk mechanisms like stop-losses. The information is only for consumption by the client and such material should not be redistributed. We do not recommend any particular stock, securities and strategies for trading. The securities quoted are exemplary and are not recommendatory. The stock names mentioned in this article are purely for showing how to do analysis. Take your own decision before investing.