Trade setup for 26 April: NIFTY50 above 22,500, will it sustain the up move?
Upstox
4 min read • Updated: April 26, 2024, 8:25 AM
Summary
The NIFTY50 is currently trading above all of its major daily moving averages (20 and 50) and has turned the resistance zone (22,400-22,500) into immediate support. However, traders may want to keep an eye on the 22,800 level as the next hurdle for a sustained rally.
Asian markets update 7 am
The GIFT NIFTY is trading marginally higher, suggesting a flat to positive start for the Indian equities today. Meanwhile, other Asian markets are trading in the green. Japan’s Nikkei 225 is up 0.2%, while Hong Kong’s Hang Seng index climbed 1.1%.
U.S. market update
The U.S. market fell on Thursday after a weaker than expected GDP report raised concerns about the health of the economy. The Dow Jones Industrial Average led the decline, falling 1%, while the S&P 500 (-0.4%) and Nasdaq (-0.6%) also closed lower. Treasury yields rose as investors reassessed the Federal Reserve's interest rate plans. However, after the market-hours earnings reports from Alphabet and Microsoft were released which were above the Street’s expectations.
NIFTY50
May Futures: 22,645 (▲0.6%)
Open Interest: 2,38,630 (▲34.7%)
The NIFTY50 started the expiry session with a gap down and after an initial sideways move, the index zoomed above the 22,400 and 22,500 resistance zones to close above the psychological 22,500 level.
As we reminded our readers, the index has been encountering regular resistance in the 22,400 and 22,500 zones for the past two days, but has failed to break through. On Thursday, the index broke out of this resistance and formed a bullish engulfing candle on the daily chart, capturing the previous two candles.
The index is currently trading above all of its major daily moving averages (20 and 50) and has turned the resistance zone (22,400-22,500) into immediate support. However, traders may want to keep an eye on the 22,800 level as the next hurdle for a sustained rally.
The initial open interest for the 2 May expiry has immediate call base at 22,900 and 23,000 strikes, whereas the put accumulation is spead between 22,500 to 22,300 strikes.
BANK NIFTY
May Futures: 48,632 (▲0.6%)
Open Interest: 1,23,967 (▲14.9%)
The BANK NIFTY outperformed the NIFTY50 and extended its rally for the fifth consecutive day to close higher on Thursday, led by buying in major PSU banks along with private banking major Axis Bank.
Similar to the NIFTY50, the banking index formed a bullish engulfing candle on the daily chart after a gap down start. The index has crossed the immediate hurdle zone of 48,000 and 48,200, which will now act as an immediate support zone. On the other hand, resistance remains at the 49,000 level.
Open interest (OI) data for the 30 April expiry has strong put base at 48,000 strike, while the call base is spread from 48,500 to 49,000 strikes. Based on the OI data, traders are expecting BANK NIFTY to trade between 47,800 and 49,200.
FII-DII activity
Foreign Institutional Investors (FIIs) sold the shares for the fourth day in a row and offloaded equities worth ₹2,823 crore. However, the Domestic Institutional Investors (FIIs) bought shares of nearly double the amount (₹6,167 crore) and absorbed the selling pressure. 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: Idea, Axis Bank, SBI and ITC
Short build-up: Kotak Mahindra Banj, Dalmia Bharat, Indian Hotels and JK Cement
Under F&O ban: Idea
Out of F&O ban: ABFRL, Hindustan Copper, and Steel Authority of India
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.