Trade setup for April 22: Can NIFTY50 bounce back after weak opening on Wednesday?

Indian markets are set to open lower amid mixed global market cues. The US markets closed in red, and the Asian markets opened mixed, with Japan trading in green on Wednesday morning. The GIFT NIFTY futures fell over 150 points on Wednesday morning, suggesting a weak start for Indian markets. Additionally, the crude oil prices soared over 5% on Tuesday evening after the US and Iran parted ways from the negotiation talks.

Foreign investors continued to be net sellers in the cash market, offloading shares worth ₹1,918 crore. This brings April’s total net outflow to ₹42,202 crore, with ₹35,121 crore sold in just the first four sessions.

In index futures, however, the tone is shifting. FIIs have been trimming short positions, bringing the long-to-short ratio to 23:77. Net open interest now stands at -1.73 lakh contracts, an 8% reduction from Monday.

NIFTY50

The NIFTY50 opened nearly 100 points higher on Tuesday and extended the gains throughout the day. On the hourly charts, the NIFTY50 index has maintained its bullish stance with strong momentum for nine consecutive days. The index has managed to defend the short-term moving average of 20 EMA for nine consecutive sessions, indicating a prevailing buy-on-dips strategy adopted by traders. The downside remains protected at 20 and 50 EMA levels in the near term, and the resistance now remains at 24,800 levels.

NIFTY50-OI analysis

The initial buildup for the coming monthly expiry on 28th April suggests that the 24,500 remains a crucial support level for the index. The 24,500 puts hold the highest open interest, indicating downside protection. On the flipside, 25,000 calls hold the highest open interest, indicating a strong resistance for the expiry.

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. We do not recommend any particular stock, securities or strategies for trading. The securities quoted are exemplary and are not recommended. The stock names mentioned in this article are purely for showing how to do analysis