Trade setup for Oct 6: Can NIFTY50 defend the gains above 22,600 on expiry day?

GIFT NIFTY futures surged 60 points on Tuesday morning, indicating a positive start for NIFTY50. Subdued crude oil prices fell, and overnight gains in the US markets boosted investor confidence.

Brent crude oil futures held their previous day losses to trade near $100 per barrel mark as supply disruption fears eased after shipments through the Strait of Hormuz resumed.

The US markets extended their rally from the previous week, hitting a fresh peak on the NASDAQ 100, up over 280 points. Dow Jones and the S&P 500 closed 0.1% and 0.6% higher as investors reassessed the risks of inflation and higher interest rates.

The Asian markets opened mixed on Tuesday morning, as the Korean KOSPI witnessed profit booking at higher levels. However, the Japanese and Hong Kong benchmark indices surged as much as 0.75%, taking cues from positive global markets.

NIFTY50 chart check

NIFTY50 staged a smart recovery from lower levels on Monday, surging over 200 points from its intraday low. However, volatility kept the index in check, with 0.6% gains at the close. The index formed a doji candlestick pattern on the daily chart, suggesting indecision about the market's further direction.

Additionally, the index also bounced back above the weekly 200-SMA levels, adding some hope for bulls to regain strength. However, the short-term momentum remains sideways-to-bearish as the index continues to trade below the 20 and 50 EMA levels. Ahead of today’s weekly expiry, the 22,400-22,500 zone remains a crucial near-term support zone.

NIFTY50 open interest summary

Ahead of the weekly expiry, the open interest data saw strong deviation and skewness towards the put side as 22,400 and 22,500 puts witnessed strong open interest addition during Monday’s trading session. Similarly, on the flip side, the 22,800 and 23,000 calls witnessed strong open interest addition, indicating strong resistance for NIFTY50 on the upside.

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