Trade setup for Aug 5: Can NIFTY50 bounce back above 24,700 on Wednesday?

GIFT NIFTY futures soared over 120 points at 7:30 am, suggesting a gap-up opening for NIFTY50 on Wednesday. The sharp fall in crude oil prices in the past few sessions and receding geopolitical tensions in the Middle East could act as positive triggers for Indian markets.

Brent crude oil futures traded near the $79 per barrel mark after plunging 6% on Tuesday. The US Treasury Secretary Scott Bessent said the talks with Iran are in good progress and the deal could be announced soon.

The US stock markets resumed their record run as Dow Jones and the S&P 500 made fresh peaks on Tuesday. The Dow Jones surged over 900 points, and the S&P 500 jumped 1.7% to hit fresh record highs. Meanwhile, the NASDAQ 100 soared over 3.3% on Tuesday, led by gains in chip stocks.

Similarly, the overnight gains in US stocks fuelled the rally in Asian markets as the Japanese Nikkei and Korean KOSPI indices surged as much as 3.3% on Wednesday morning. Meanwhile, the Chinese and Hong Kong markets traded flat with virtually no gains.

NIFTY50 chart summary

The ending-hour volatility due to the CAS pricing mechanism persisted for the second consecutive day on Tuesday. However, the index managed to defend the crucial moving averages of 20, 50 and 200 EMA on a closing basis. Going forward, a closing above the 24,700-24,750 zone could fuel more momentum in the index towards 25,000. On the flipside, the 24,300-24,400 zone remains a pivotal support level for NIFTY50. Alongside this, traders should remain cautious during the closing-hour session until the CAS price mechanism fully settles.

NIFTY50 open interest data

The open interest data for the coming weekly expiry suggests strong open interest buildup on the higher side near the 24,600 to 24,700 zone, indicating strong resistance near this zone. On the downside, the 24,000 to 24,400 zone holds strong open interest concentration, indicating near-term support for NIFTY50.