Trade setup for Sept 7: GIFT NIFTY indicates a muted start, can NIFTY50 defend 23,800?

The Indian benchmark indices are expected to open on a muted note, extending their previous week’s weakness on Monday. The GIFT NIFTY futures fell nearly 40 points on Monday morning, indicating a muted start for NIFTY50.

Brent crude oil prices hovered near $97 per barrel after last week’s hostilities in the Middle East region, amid elevated supply disruption concerns. Brent crude oil futures soared over 9% in the previous week.

The US closed the previous week on a mixed note as the Dow Jones and the S&P 500 closed near the flat lines, while the NASDAQ 100 closed with little gains. Friday’s stronger-than-expected jobs data again boosted fears of a rate hike in the upcoming policy meeting.

Meanwhile, the Asian markets opened the week on a positive note as Japanese and Korean markets witnessed strong buying activity at lower levels. The KOSPI soared 3%, followed by the Japanese Nikkei at 2.4%. Meanwhile, the Hong Kong markets opened on a negative note with over 0.4% losses.

NIFTY50 Chart Summary

The index continues to hold the bearish momentum as it closed below the psychological benchmark of 24,000 for nearly the entire week. On the daily charts, the 24,000 level remains a crucial resistance for today’s trading session. On the flip side, 23,800, which was the previous week’s swing low, may act as a near-term support for NIFTY50.

On the hourly charts, the setup continues to remain bearish with NIFTY50 closing below the 20 and 50 EMAs for nearly the entire week.

NIFTY50 open interest summary

The 24,000 calls hold the highest open interest, indicating a strong resistance for NIFTY50 on Monday. Meanwhile, 23,800 and 24,000 puts witnessed strong open interest concentration in Friday’s trading session, indicating open interest buildup on the downside. The 23,800 could act as strong support for NIFTY50.