Trade setup for May 14: Can NIFTY50 bounce back above 23,500 on Thursday?

Indian benchmark indices are expected to open higher amid positive global market cues on Thursday. However, elevated crude oil prices have kept investor sentiment sour in Indian markets. Meanwhile, global market cues remain upbeat, with the US and Asian markets trading near record highs, lifted by a rally in tech stocks.

The US markets resumed the rally on Wednesday after a brief pause as investors assessed the risks from the Middle East war. The S&P500 and NASDAQ closed 0.5% and 1.2% higher, led by tech stocks. Investors remain cautious ahead of the Federal Reserve’s decision, which is expected to maintain the status quo.

The Asian markets bounced back from the previous day’s losses to hit fresh record highs. The Japanese made a fresh record high by soaring 0.5%, and the Korean index fell just short of making a new milestone of 8,000. The buoyancy in the tech stocks in Asian markets remained a major trigger for the record rally amid a bleak geopolitical scenario. The GIFT NIFTY futures jumped from an early morning glut to trade over 100 points higher, indicating a positive opening.

NIFTY50 chart check

The NIFTY50 made a morning star candlestick pattern, which indicates a bullish reversal after a breakdown, provided the index should close above the high level of the long bearish candle. If the index manages to close above 23,700. If the index closes below the previous day’s low, the setup is invalidated for bullish reversal.

NIFTY50 OI Analysis

The open interest data for the coming weekly expiry suggest a broad range of trades for NIFTY50. The 23,000 puts hold the highest open interest, indicating strong support for the index. On the flipside, 23,500 calls hold the highest open interest, indicating strong resistance. However, the 23,900 call witnessed heavy open interest addition, indicating if the index manages to close near 23,500, a short covering rally could pull the index higher towards 23,900.