Trade setup for Oct 28: GIFT NIFTY futures indicate a gap down opening for NIFTY50, can it recover?

Indian benchmark indices are expected to open in deep red, following a flat session on Tuesday. The GIFT NIFTY futures fell over 150 points, indicating a weak opening for NIFTY50 on Wednesday. Meanwhile, the investors will closely watch the listing of India’s biggest IPO of Jio Platforms on Wednesday.

Brent crude oil prices hover near $115 per barrel level as investors continue to assess the diplomatic efforts between Iran, Middle East nations and the US. Iran’s Supreme Leader Mojtaba Khamenei called for an end to the current state of “neither war nor peace,” signaling a possible opening for negotiations.

The US stock market closed mostly in the green on Tuesday amid a sharp bounceback in tech stocks ahead of the Federal Reserve’s policy outcome on Wednesday. The NASDAQ 100 rose 1.3%, the S&P 500 jumped 0.6% and the Dow Jones ended flat.

The Asian markets rallied on Wednesday morning, amid surrounding optimism over the chip-stock earnings. The Korean KOSPI surged over 5% after SK Hynix reported strong earnings. The Japanese Nikkei and Taiwan’s weighted benchmark jumped up to 1.6% respectively.

NIFTY50 chart check

NIFTY50 closed the October series on a flat note, dropping 8 points at the close on Tuesday. The benchmark indices continue to trade rangebound with no clear direction. However, the index continues to trade above 20 and 50 EMA, indicating bullishness in the short term.

Additionally, the hourly chart also indicates a potential positive crossover of 20 EMA crossing 50 EMA from below, boosting the chances for a breakout from the consolidation.

However, the daily charts show, strong resistance zone of 22,800, which is also the daily 20 EMA level for NIFTY50. A clear direction can only be determined if the index closes above 22,800 or below 22,300 levels on a weekly basis.

NIFTY50 open interest summary

The initial buildup for coming weekly expiry on November 3, indicates broad range of trade between 22,000 to 23,000. The 23,000 calls held the highest open interest, indicating a key resistance zone for NIFTY50. On the downside, the 22,000 puts held the highest open interest, indicating near term support zone. The net open interest contracts on the short side fell from 2.67 lakh to 2.2 lakh, indicating some light positioning by the FIIs.

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