Trade setup for March 4: NIFTY50 braces for big gap down opening, will it bounce back?

NIFTY50

Max call OI:25,000

Max put OI:24,500

(Ten strikes to ATM, 10 March expiry)

The NIFTY50 is expected to witness continued selling pressure on Wednesday as world markets posted the sharpest selloff across the globe. The Asian markets fell over 7% on Tuesday and continued to trade lower on Wednesday morning. The US markets also fell over 2% on Wednesday. The GIFT NIFTY futures also fell over 600 points, indicating for a sharp gap down opening on Wednesday.

On the technical charts, the NIFTY50 managed to close above the crucial budget-day-low levels, indicating some buying support at these levels. However, the 24,571 level will be closely watched as bulls hope for a closing above these levels, for the index to bounce back near the 25,000 levels. The fresh momentum can only be expected if the index posts a weekly close above the 200 EMA levels on Friday.

On the options data front, the initial buildup for 10th March expiry indicates 25,000 as the strong resistance zone with the highest open interest on the call side. The 24,500 puts hold the highest open interest on the downside, indicating a crucial support.

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Long buildup: -BEL

Short buildup: IndiGo, L&T

Top traded futures contracts: HDFC Bank

Top traded options contracts: HDFC Bank 850 PE

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