Trade setup for Oct 9: Can NIFTY50 defend 22,200 levels on Friday?

Defying global bearish sentiment, GIFT NIFTY futures jumped over 100 points, signaling a positive start for the NIFTY 50 on Friday. The benchmark indices hit April swing lows on Thursday amid sustained, broad-based selling pressure.

Meanwhile, the Asian markets extended their fall from Thursday as the Japanese, Korean and Hong Kong benchmark indices fell as much as 2.1% on Friday morning. Overnight selling in US tech stocks prompted profit booking in Asian tech stocks.

The US stock markets closed mixed, with gains in the Dow Jones, while S&P 500 and NASDAQ closed in deep red, sliding up to 1% on Thursday amid profit booking in tech stocks at higher levels.

Brent crude oil prices and US treasury bond yields cooled off on Friday morning after President Trump said that the US will not attack Iran untill its mid-term elections in November. Brent crude oil prices fell back to $103 per barrel, and US 10Y yields eased to 5.23%

NIFTY chart summary

The index witnessed one of the sharpest falls in two weeks as the NIFTY50 closed over 1.6% lower on Thursday. Additionally, the index also broke the April swing low support of 22,180 in the intraday session, indicating sustained bearish sentiment.

Going forward, 22,200 will remain a key support level to watch on Friday, as it remains a major support for the index on the downside. The upside looks now restricted near the 22,600-22,700 zone.

NIFTY50 open interest summary

The open interest data for the upcoming weekly expiry indicates that 22,500 will act as a strong resistance with over 1 crore contracts getting added in Thursday’s session. On the flip side, 22,000 will act as a floor for the index, with the highest open interest on the put side.