Trade setup for Sep 21: Can NIFTY50 defend 23,300 levels on Monday?

GIFT NIFTY futures indicate a negative opening for Indian markets on Monday. Volatility in crude oil and global bond yields is likely to curb investor optimism.

Brent crude oil futures closed the previous week with nearly a percentage point loss, staging a technical pullback from four-month high levels. However, volatility remains as the crisis in the Russia-Ukraine war and the US plan to attack the Houthi rebels in Yemen could send oil prices back to recent highs.

The US markets closed the previous week on a mixed note, with the Dow Jones and the S&P500 declining up to 1% for the week, while the NASDAQ 100 soared over 270 points or 1% higher for the week amid renewed interest in the tech stocks at lower levels.

Meanwhile, the US 10Y yields bounced back above 5% levels, indicating a higher-for-longer interest rate scenario for the US economy. The renewed volatility in yields is likely to steer volatility in bond and equity markets once again.

The Asian markets closed the previous week on a muted note, with Japanese and Chinese indices rising 1%, while Korean and Hong Kong indices losing over 1%.

NIFTY50 chart summary

The benchmark index logged the longest streak of weekly losses, extending for six consecutive weeks. However, the index bounced back over 75 points on Friday and sustained above the hourly 20 EMA levels, indicating some strength at lower levels.

On the daily charts, 23,100 remains a crucial support for the NIFTY50, as the index defended the level on a weekly basis. Meanwhile, the 15th September swing high level of 23,592 remains a near-term major hurdle for the bulls to regain the lost ground in the NIFTY50. The RSI on the daily chart also moved from oversold to neutral on Friday, indicating some buying strength at lower levels.

NIFTY50 open interest summary

After Friday’s trading session, the open interest data indicates a skewness towards the put side. The 23,300 puts witnessed strong open interest addition and held the highest open interest, indicating strong support for the coming weekly expiry. On the flip side, 23,700 calls held the highest open interest, indicating strong resistance for the index.