Trade setup for 19 April: NIFTY50 breaks 50-DMA, next support at 21,700

Asian markets update 7 am

After a negative handover from Wall Street, Indian equities are looking at a gap down start, as indicated by the GIFT NIFTY (-0.9%). Other Asian markets are also trading lower. The Nikkei 225 is down 2.8% and Hong Kong's Hang Seng Index is down 1%.

U.S. market update

U.S. equities ended Thursday's volatile session lower as the Atlanta Fed official stressed that he didn't expect lower interest rates until the end of the year. This led to a sharp rise in bond yields and sent equities tumbling.

The S&P 500 and Nasdaq Composite fell for the fifth consecutive day, closing 0.2% and 0.5% lower at 5,011 and 15,601 respectively. Meanwhile, the Dow Jones Industrial Average closed flat.

NIFTY50

April Futures: 22,055 (▼0.5%)

Open Interest: 2,29,801 (▲4.1%)

The NIFTY50 gave up its opening gains and closed lower on the weekly expiry of F&O contracts. The recent fall took the index down more than 3% from its recent peak and below the key psychological level of 22,000.

On the daily chart, the index encountered resistance around its 20-day moving average (DMA) and experienced a sharp sell-off in the second half of the session. In yesterday's morning trade setup blog, we highlighted to our readers to watch for a close above or below the doji candlestick formed on the 16 April for further directional clues.

As highlighted, the index closed below the doji candle and its 50-DMA, forming a bearish engulfing candle on the daily chart. Going forward, immediate resistance for the index is at the 20-DMA (around 22,300) and next support is at 21,700, a key swing low.

The initial open interest (OI) for the monthly expiry of NIFTY50 has significant call OI at 22,500 and 22,300 strikes. On the other hand, the put base is present at 22,000 and 21,500 strikes.

BANK NIFTY

April Futures: 47,175 (▼1.0%)

Open Interest: 1,25,481 (▲2.8%)

The BANK NIFTY also extended its decline for the fourth consecutive day, forming a bearish engulfing candle on the daily chart. Similar to the NIFTY50, the index failed to hold on to its morning gains and saw heavy selling in line with the NIFTY50, slipping below the key support zone of 47,300-47,500.

Going forward, the index has immediate support at its 50-DMA which is placed between 46,900-47,000 zone. Traders may want to keep an eye on these crucial levels, as a break below it could extend the decline to the 46,500 level, which is the index's next crucial support.

Open interest build-up for the monthly expiry of BANK NIFTY has significant call OI at 48,000 and 49,000 strikes. The put options base is accumulated at 47,000 and 47,500 strikes. Based on the option data, the traders expect BANK NIFTY to trade between 46,000 and 48,000.

FII-DII activity

Foreign Institutional Investors (FIIs) remained net sellers for the fourth consecutive day and sold shares worth ₹4,260 crore. On the other hand, the Domestic Institutional Investors (DIIs) purchased shares worth ₹2,285 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: Bharti Airtel, Indus Towers, PVR Inox, Crompton Greaves and Power Grid

Short build-up: Indraprastha Gas, ABB, Nestle India and ONGC

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

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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