Trade setup for Oct 8: Can NIFTY50 defend 22,500 levels on Thursday?

GIFT NIFTY futures traded 20 points lower, indicating a muted start for NIFTY50 on Thursday. Q2 earnings season and volatility in bond yields and crude oil prices, likely to drive sentiment for Indian markets.

Brent crude oil prices eased off in the overnight session to hover near $101 per barrel on Thursday morning. Saudi Arabia cut official selling prices for its flagship crude grade to $5 below the regional benchmark as tankers were able to depart the Persian Gulf with full cargoes.

The US stock markets closed in the red as Treasury yields surged to fresh peaks on Wednesday. The Dow Jones plunged over 500 points, and the NASDAQ and the S&P 500 fell 0.6% in the intraday session. However, some pullback in bond yields and oil prices eased selling pressure in the closing session.

Taking cues from the negative global market cues, Asian markets opened in the red for the second time in a row. The Japanese Nikkei fell 400 points, while the Hong Kong and Korean indices plunged up to 0.3% on Thursday.

NIFTY50 chart check

After a two-day breather, the index snapped the rally to close 173 or 0.7% lower on Wednesday. On the hourly charts, the index closed below the 20 and 50 EMA, reversing the previous day’s bullish momentum to neutral.

In the absence of follow-up buying at higher levels, the index has now formed a sideways-to-bearish chart structure, indicating a range-bound trade between 22,300 and 22,700. Going forward, a decisive close above these levels will help determine the direction of the index.

NIFTY50 open interest summary

The open interest data for the coming weekly expiry indicates high skewness towards the calls side, indicating limited upside potential for NIFTY50 with strong open interest concentration on the upside. The 22,700, 22800 and 23,000 calls hold strong open interest concentration, indicating key resistance levels for the NIFTY50. On the downside, 22,000 puts hold the highest open interest, indicating a near-term support for the NIFTY50.

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