Trade setup for Sept 9: Can NIFTY50 defend 23,600 and bounce back on Wednesday?

GIFT NIFTY futures indicate a muted start for NIFTY50 for the third consecutive session as global market cues continue to remain weak. Elevated crude oil prices may continue to act as a sentiment dampener for Indian markets

Brent crude oil futures rose above the $99 per barrel mark on Wednesday, after rallying over 2% on Tuesday. The hostilities in the Middle East region continued as the US conducted military strikes near Kharg Island and Jask port, reigniting fears regarding potential supply bottlenecks in the region.

Wall Street opened the week with losses on Tuesday as elevated crude oil prices reignited fears of higher inflation. The Dow Jones shed more than 600 points, and the S&P 500 fell over 0.5%, while the NASDAQ 100 closed almost flat with 36-point losses.

On the contrary, Asian markets opened in the green on Wednesday morning as the local currencies gained strength against the US dollar. The Japanese markets rose almost 1%, and the KOSPI jumped over 1.5% on Wednesday morning.

NIFTY50 chart summary

NIFTY50 extended its fall for the second consecutive day on the expiry day, shedding 144 points on Tuesday. The index now stands at a crucial support level of 23,600, which is also July’s swing low. The RSI now stands at an oversold 30, suggesting a bounce back from current levels.

However, the momentum continues to remain bearish until the index closes above 23,800 in the very near-term. The medium-term resistance level remains at 24,000, above which the momentum could turn to neutral.

NIFTY50 open interest data

The initial buildup for the upcoming weekly expiry indicates skewness towards the call side, indicating strong limitations on the upside. The 24,000 calls continued to hold the highest open interest, indicating a strong resistance level for NIFTY50 this week. On the flip side, 23,500 puts hold the highest open interest, indicating near-term support for NIFTY50.