Trade setup for July 27: GIFT NIFTY indicates gap up opening on Monday; will it sustain?

Taking cues from a sharp fall in oil prices, GIFT NIFTY futures were trading 139 points higher at 7:55 am on Monday, indicating a gap-up opening for the NIFTY50. The fall in the dollar index and US Treasury yields will be a sentiment booster during Monday’s session.

Crude oil prices plunged over 10% on Monday morning, after the US and Iran halted strikes against each other, giving room for diplomatic dialogue. Brent crude oil futures traded near $88 per barrel, after hitting $85 per barrel early Monday morning.

The US stock market futures rallied on the easing of tensions in the Middle East. The NASDAQ 100 and Dow Jones futures jumped over 1% on Monday morning.

Meanwhile, Asian markets opened mixed on Monday, following high volatility in tech stocks last week. The Japanese Nikkei rose 0.2%, and the Korean KOSPI fell 1%.

NIFTY50 chart

The NIFTY50 extended its losing streak to the fifth consecutive session on Friday, closing 0.4% lower at 23,767. However, the index filled the important gap created on June 15, which remained a crucial anchor for the index’s rise. The index continues to trade below the 20- and 50-day EMAs on an hourly basis, indicating sustained bearish sentiment.

On the daily charts, the index also defended a swing low trendline from April 2, indicating a major support zone for the NIFTY50. A weekly close below 23,650 would lead to bearish momentum in the index for the August series.

NIFTY50 open interest data

The options data for tomorrow’s monthly expiry indicates a narrow range of trade between 23,500 and 24,000. The 23,500 puts hold the highest open interest, indicating strong support for NIFTY50, and 24,000 calls hold the highest open interest on the upside, indicating strong resistance.