Trade setup for Sep 28: GIFT NIFTY indicates gap down opening for NIFTY50 on Monday, will it bounce back?

The GIFT NIFTY futures fell over 80 points on Monday morning, indicating a gap-down start for NIFTY50 on Monday. Elevated global bond yields remain key sentiment drivers for FIIs who became net sellers in the Indian markets again in September.

Crude oil prices were little changed on Monday morning, after the US rejected Iran’s proposal to reopen the Strait of Hormuz. Brent crude oil prices suffered the biggest weekly loss in three months, dropping over 5% and below the pivotal $100 per barrel mark on Friday.

The US stock market futures opened lower on Monday morning after the US 10Y yields surged to 19-year high levels of 5.2%. Meanwhile, the US benchmark indices largely closed the previous week with gains, despite the volatility as NASDAQ 100 and the S&P 500 rose 1.5% and 0.5%, while the Dow Jones dropped over 0.6%.

Taking cues from bounce back in the treasury yields, the Asian markets largely opened in the red on Monday morning. The Korean Kospi fell the most, over 2%, while the Japanese markets opened flat.

NIFTY50 chart summary

NIFTY50 maintained the losing streak for the seventh consecutive week, indicating a sustained bearish grip over Indian benchmark indices. However, the index managed to defend a psychological support level of 23,000 on Friday, aiding some improvement in the sentiment at lower levels. The index continues to trade in a sideways-to-bearish trend, below the 20 and 50 EMA on the hourly charts.

On the daily charts, the index managed to close above the June swing low trend line support on Friday, creating a triple bottom type formation. The upside remains capped at the 23,400-500 zone near the daily 20 EMA levels, while 23,000 stands as a crucial support level for this week.

NIFTY50 open interest data summary

The monthly expiry open interest data indicates a trading range of 23,000 to 23,500. The 23,000 puts held the highest open interest, indicating limited downside for NIFTY50. On the flipside, 23,500 calls held the highest open interest, indicating a limited upside near 23,500.