Trade setup for Sep 24: GIFT NIFTY indicates gap down opening for NIFTY50, can it bounce back?

GIFT NIFTY futures fell over 180 points on Thursday morning, indicating a gap-down open for NIFTY50. The sharp pullback in US Treasury yields worried investors about global economic stability.

Crude oil prices witnessed strong volatility overnight as the Brent crude oil price surged above $103 per barrel on the face-off between Iran and the US at the United Nations General Assembly. However, the volatility cooled further as Brent crude oil prices plunged over 5% on Thursday morning, alleviating fears of supply disruptions.

Meanwhile, the sharp pullback in US Treasury yields to multi-decade high levels left investors on the edge. The US 30Y yields crossed the 5.3% mark, while the US 10Y yields surged above 5.1% on Wednesday, adding worries of heightened borrowing costs. Consequently, the Dow Jones fell over 350 points, followed by the NASDAQ, down over 200 points.

The Asian markets traded mixed on Thursday morning as Japanese and Korean markets continued their upward trajectory, while the Chinese and Hong Kong benchmark indices fell as much as 0.9%, ahead of the Xi-Trump meeting.

NIFTY50 chart summary

The NIFTY50 staged a smart recovery from Tuesday’s low to close above 23,400 on Wednesday. The index also managed to close above the hourly 20 and 50 EMA’s, suggesting some underlying buying strength at lower levels.

On the daily charts, the index formed an inside bar candlestick pattern, negating the previous day's bearish engulfing pattern. However, the index continues to remain in a broad range of 23,300 to 23,500.

NIFTY50 open interest summary

The open interest data for 23,000 puts held the highest open interest, indicating strong support for the coming monthly expiry. On the flip side, 23,500 calls held the highest open interest, indicating strong upside resistance.