Trade Setup for Dec 5: Volatility surges as NIFTY50 fails to break 24,500 resistance

Asian markets @ 7 am

• GIFT NIFTY: 24,521 (-0.10%)
• Nikkei 225: 39,517 (+0.63%)
• Hang Seng: 19578 (-0.83%)

U.S. market update

Dow Jones: 45,014 (▲0.6%) S&P 500: 6,086 (▲0.6%) Nasdaq Composite: 19,735 (▲1.3%)

U.S. stocks extended their winning streak for the fourth day in a row, with the S&P 500, Nasdaq 100 and Dow Jones all closing at record highs. The sharp gains were led by technology stocks after strong reports from Salesforce and chipmaker Marvel Technology.

NIFTY50

• December Futures: 24,561 (▲0.0%)
• Open interest: 4,62,042 (▼0.7%)

After a positive start, the NIFTY50 surrendered all its intraday gains and ended Wednesday's session on a flat note. The index formed a doji candlestick pattern on the daily chart after a sharp recovery in previous three sessions.

On the daily chart, the index faced resistance around the crucial zone of 24,500 and 24,600, forming a doji candlestick pattern. The doji is a neutral candlestick pattern which reflects indecision among investors at the current levels. However, a close above or below the doji may provide further directional clues for the near-term.

For today’s expiry, the NIFTY50 index has immediate resistance around the 24,600 zone and the support is visible around the 24,300 zone. Traders can monitor this broadly 300 point range and unless the index breaks this range with a strong candle during the intraday, the trend may remains sideways.

The open interest data for today’s expiry saw significant call build-up at 24,500 and 24,600 strikes, indicating that the index may face resistance around these levels. Conversely, the put base remained at 24,000 strike, suggesting support for the index at this level.

SENSEX

• Max call OI: 83,000
• Max put OI: 77,000

The SENSEX also started the day on a positive note and failed to build-up on its opening gains. The index also formed a doji candlestick pattern on the daily chart and consolidated around the 81,000-mark.

The technical structure of the SENSEX remains bullish after the index captured the 80,500 level on a closing basis on 3 December. Meanwhile, traders can monitor the low and the high of the doji candlestick pattern. A close above or below these levels on the daily chart will provide further directional clues.

The open interest data for the 6 December expiry has a significant call base at 81,000 and 80,500 strikes, indicating that the index may face resistance around these levels. On the contrary, the put significant put base remained at 80,000 and 80,500 strikes, pointing at support for the index around these levels.

FII-DII activity

Stock scanner

• Long build-up: Macrotech Developers, Godrej Properties, CDSL, Indian Bank and One 97 Communications (Paytm)
• Short build-up: ACC, Escorts Kubota, FSN E-Commerce (Nykaa) and Samvardhana Motherson
• Under F&O ban: Granules India, Manappuram Finance and RBL Bank

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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