Trade setup for 24 April: NIFTY50 stumbles at 22,400, volatility index crashes 19%

Indian equities are set for a positive start as the GIFTY NIFTY climbs 0.3%, surpassing the 22,450 mark. Other Asian markets are also trading higher. Japan's Nikkei 225 is up 1.7% and Hong Kong's Hang Seng Index is up 0.8%.

U.S. market update

U.S. indices closed higher for the second day in a row as strong earnings from Spotify and General Motors boosted the sentiment. Conversely, the higher interest rates concerns took the back seat and the 2-year Treasury yield fell to 4.93% after touching 5% earlier this month.

The Dow Jones Industrial Average climbed 0.6% to 38,503, while the S&P 500 gained 1.2% and ended the session at 5,070. The tech-heavy Nasdaq Composite advanced 1.6% to 15.696.

NIFTY50

April Futures: 22,371(▼0.0%)

Open Interest: 1,75,944 (▼8.7%)

After a positive start, the NIFTY50 traded in a narrow range to end Tuesday's session with small gains. Extending gains for the third day in a row, the index once again saw profit taking at higher levels, resulting in a lack of momentum.

The NIFTY 50 has maintained positive structure on the daily chart, holding a higher-high and higher-low pattern and is sustaining above important moving averages (20-day and 50-day). It's consolidating within a well-defined range (21,700 - 22,600) marked by the red and green bands in the chart below (except for a failed breakout attempt).

With the volatility index plunging 19% to a low of 10.19, traders are advised to be wary of a sudden spike in option premiums that could occur closer to the monthly expiry.

Options data indicate substantial call open interest on the 22,400 and 22,500 strikes, while the put options are accumulated at 22,000 and 22,100 strikes. As per options data, traders are expecting NIFTY50 to trade between 21,900 and 22,600.

BANK NIFTY

April Futures: 47,991 (▼0.0%)

Open Interest: 66,187 (▼28.6%)

The BANK NIFTY extended its rally for the third consecutive day and closed higher on Tuesday. The index once again rejection from the 48,000 and 48,200 resistance levels and failed to close above the psychologically important 48,000 level.

The daily chart displays a negative candle that relinquished all of its early gains to close below the opening prices of the previous two sessions. This suggests that traders opted to take profits, showing reluctance to maintain positions at higher price levels. For today's expiry, we have highlighted key support and resistance levels on the hourly timeframe for our readers, as breache on either side will provide further directional clues.

The options data for today's expiry has maximum call OI at 48,000 and 48,500 strikes, marking this as a resistance zone for the index. Conversely, the put options OI has maximum base at 48,000 and 47,000 strike. Based on options data, traders are expecting BANK NIFTY to trade between 46,800 and 48,800.

FII-DII activity

Foreign Institutional Investors (FIIs) remained net sellers and sold shares worth ₹3,044 crore on Tuesday. On the flip side, the Domestic Institutional Investors (DIIs) purchased shares worth ₹2,918 cror. To track the ratio of long and short open positions of FIIs in the index, log in to https://pro.upstox.com/ ➡️F&O➡️FII-DII Activity➡️FII Derivatives

Stock scanner

Long build-up: Bharti Airtel, Grasim, AB Capital, ABFRL, Navin Fluorine and Metropolis

Short build-up: M&M Financial, Abbot India, Sun Pharma, ABB and Oracle Financial Services

Under F&O ban: Hindustan Copper, Idea and Steel Authority of India

Out of F&O ban: Biocon, Piramal Enterprises and Zee Entertainment

To access a specially curated smartlist of most traded and active stocks, as well as the OI gainers and losers, simply log in: https://pro.upstox.com/ ➡️F&O➡️Options smartlist/Futures smartlist

In Futures and Options or F&O, long build-up means an increase in Open Interest (OI) along with an increase in price, and short build-up means an increase in Open Interest(OI) along with a decrease in price.

Source: Upstox and NSE.

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