Trade setup for March 6: GIFT NIFTY indicates gap down opening, can it bounce back again?

NIFTY50

Max call OI:25,000

Max put OI:24,500

(Ten strikes to ATM, 10 March expiry)

The NIFTY50 bounced back from the lower levels as investors reassessed the risks arising from the West Asia crisis. However, the bounce is expected to remain short-lived as the GIFT NIFTY futures indicate a gap down opening on Friday as the conflict between Iran, Israel and the US escalated further. The US markets closed lower, with the Dow Jones plunging nearly 800 points on Thursday. The Asian markets continued to trade in red after a bounce back on Thursday. The crude oil prices elevated further, hitting a nearly two-year high of $86 per barrel.

On the technical charts, the NIFTY50 closed near the 50 EMA levels, adding some hope for bulls to regain the momentum in the short-term period. Additionally, the index also closed above the budget-day-low level, signalling buying pressure at the lower levels. Experts believe the index should hold the 24,400 levels on Friday, signalling stability before deciding on the next direction in the markets.

On the options data front, the 24,500 puts witnessed heavy open interest addition, indicating that downside risks remain protected near the 24,500 levels. On the other hand, the 25,000 calls continued to hold the highest open interest, indicating a strong resistance for the NIFTY50.

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Long buildup: -Adani Ports

Short buildup: Tech Mahindra

Top traded futures contracts: HDFC Bank

Top traded options contracts: Infy 1420 CE

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