Trade Setup for Oct 22: NIFTY50 negates bullish piercing pattern, more weakness below 24,700?

Asian markets update

The GIFT NIFTY is trading flat, indicating a subdued start for the NIFTY50 today. Meanwhile, the major Asian indices are trading mixed. Japan’s Nikkei 225 is down 1.2%, while Hong Kong’s Hang Seng index is up 0.5%.

U.S. market update

• Dow Jones: 42,931 (▼0.8%)
• S&P 500: 5,553 (▼0.1%)
• Nasdaq Composite: 18,540 (▲0.2%)

U.S. indices ended the Monday’s session on a mixed note ahead of the key earnings that would decide the drive or drag the momentum of a record rally. The Dow Jones and S&P 500 snapped three-day winning streak, while Nasdaq Composite was the outlier, led by AI chip marker Nvidia.

Meanwhile, the investors will be focusing on the third quarter earnings of Tesla, General Motors and Coca-Cola. The EV maker Tesla will be the highlight of the week, after its robotaxi launch fell short of expectations.

NIFTY50

• October Futures: 24,788 (▼0.7%)
• Open Interest: 5,46,043 (▼2.6%)

The NIFTY50 index failed to sustain its opening gains and ended the Monday’s session on the negative note, led by technology and oil & gas stocks. The index failed to close above 18 October high, negating the bullish piercing pattern.

The broader trend of the index remains range-bound between 24,700 and 25,250, extending the consolidation for the tenth consecutive day. Unless the index breaks this range on closing basis, the trend may remain sideways.

Open interest data for the 24 October expiry saw significant call base at 25,000 strike. This zone may act as immediate resistance. Conversely, the put base was seen at 24,000 strike, indicating support for the index around this level.

BANK NIFTY

• October Futures: 52,040 (▼0.5%)
• Open Interest: 1,67,376 (▼2.0%)

After a gap-up start, the BANK NIFTY index witnessed selling pressure around its 20-day moving average and ended the day in the red, below the key 52,000-mark. Barring HDFC Bank, all other banking stocks witnessed selling pressure and closed in the red.

On the daily chart, the BANK NIFTY also failed to close above the 18 October high, invalidating the bullish engulfing pattern. The index has immediate support at the 51,000 level, while resistance is seen at the 52,500 level, the 3 October high. The trend may remain sideways to bullish unless the index breaches this range on a closing basis.

The open interest positioning for the 23 October expiry has highest call open interest placed at 54,500 strike, pointing at resistance for the index around this level. On the flip side, the put base was accumulated at 51,500 and 51,000 strike, indicating support for the index around these levels.

FII-DII activity

Stock scanner

Long build-up: N/A

Under F&O ban: Aarti Industries, Bandhan Bank, Birla Soft, Chambal Fertilisers, Gujarat Narmada Valley Fertilizers & Chemicals (GNFC), Granules India, Hindustan Copper, IDFC First Bank, IEX, Indiamart Intermesh, L&T Finance, Manappuram Finance, Piramal Enterprises, Punjab National Bank, RBL Bank and Steel Authority of India

Out of F&O ban: National Aluminium and Tata Chemicals

In Futures and Options or F&O, long build-up means an increase in Open Interest (OI) along with an increase in price, and short build-up means an increase in Open Interest(OI) along with a decrease in price.

Source: Upstox and NSE.

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