Trade setup for Nov 11: GIFT NIFTY futures jump 200 pts; can NIFTY defend the opening gains on Wednesday?

Indian benchmark indices are expected to open gap-up on Wednesday, extending its rally from Monday. The GIFT NIFTY futures surged over 200 points in between Monday and Wednesday morning, after crude oil prices plunged sharply .

Crude oil prices extended the fall after Trump hinted that he is highly unlikely to approve military operations against Iran. The Brent crude oil prices fell nearly 6% in the previous two sessions, near to $91 per barrel.

The US stock markets closed in the red on Tuesday after hotter-than-expected CPI inflation data raised the rate hike hopes. The NASDAQ 100 fell 0.6%, and the Dow Jones and S&P 500 dropped 0.3% each on Tuesday.

Shrugging off the overnight risks, the Asian markets opened in green on Wednesday morning. Japan's Nikkei and Korean Kospi surged 0.7%, and Taiwan’s Taipei jumped over 1% on Wednesday.

NIFTY50 chart check

NIFTY50 resumed the rally on Monday, after a short pause on Sunday’s special Muharat trading session. The index reclaimed the 25,000 mark, closing 58 points higher on Monday. The bullish momentum remained intact after the index bounced back from the intraday lows, indicating strong buying strength at lower levels.

The index made an intraday low of 24,838, near to its near-term support level of 24,800 and bounced back. Going forward, the 24,800 remains a pivotal support for NIFTY50, below which the index could turn bearish for the near-term.

However, the gap created on 05 November remains open, which could become a hurdle to the next leg of the rally. Considering the overbought scenario, it seems prudent to consider that the index could fill this gap first, before resuming the rally to higher levels.

NIFTY50 open interest data

The benchmark index surged over 58 points on Monday, implying strong open interest buildup near 25,000 levels. The 25,000 puts hold the highest open interest, indicating a near-term support for the index. On the flipside, 25,500 calls held the highest open interest, indicating a strong resistance on the upside.

FII and DII data summary

The foreign institutional investors continued their buying spree in the Indian equities as they bought another ₹7,212 crore worth of equities during Monday’s trading session. On the flipside, DII’s reduced their exposure, by selling ₹7,172 crore on Monday. In the derivatives market, FII’s net short position stands at 73.2% as of Monday, down from 75.4% in the session before that, indicating a sharp reversal in its stance. FIIs are now buying in equities, alongside reducing shorts in the derivatives, fuelling sharp rally in the index.