Trade setup for July 31: Can NIFTY50 defend 24,300 on Friday?

GIFT NIFTY futures traded over 60 points higher on Friday morning, indicating a positive opening for NIFTY50. The index is headed for a monthly gain of 1.8% by closing above the psychological benchmark of 24,000 for the first time in four months.

Crude oil prices head for a monthly gain of 17% on Friday after a 20% drop in the previous month. Brent crude oil prices steadied near $85 per barrel on Friday as tensions between Iran and the US remain elevated in the Middle East.

The US stock markets staged a powerful recovery on Thursday as the tech-heavy NASDAQ 100 soared over 3%, followed by 1.6% gains in the S&P 500 and the Dow Jones at 1.1%. The chip stocks bounced back sharply, recouping earlier losses: SanDisk (+27%), Micron (+18%), AMD (+13%) and Intel (+11%).

Taking cues from strong overnight gains in the US, the chip stocks in Korea posted a similar bounce back. The Korean KOSPI soared as much as 15% on Friday morning, amid sharp rallies in chip giants SK Hynix and Samsung. The Japanese and Chinese indices too soared as much as 5% on Friday morning, boosting the overall sentiment in the Asian pack.

NIFTY50 chart

The NIFTY50’s hourly chart shows sustained momentum as the index closed above the hourly 20 and 50 EMA for the second consecutive day. Additionally, the index also managed to defend the crucial support level of 24,300 on the daily charts, suggesting renewed bullish momentum in the index.

On the long-term charts, a monthly closing above the 24,000 psychological benchmark remains a pivotal milestone to cross for NIFTY50. Going forward, the 24,000-24,100 zone remains a crucial support zone for NIFTY50, with 24,500 as major resistance.

NIFTY50 open interest analysis

The open interest data for the coming weekly expiry indicates a strong OI buildup on the downside near 24,000 to 24,200 puts. The 24,000 puts hold the highest open interest, indicating strong support for NIFTY50 on the downside. Similarly, 24,600 calls hold the highest open interest, indicating near-term resistance for NIFTY50 on Friday.

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