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The NSE Nifty October futures ended 0.8 per cent lower at 24,985, while the open interest (OI) rose by 0.3 per cent and the premium from 159 points to 190 points.
The Nifty has established and broken a monthly momentum level placed at 26,150 in early October itself. We expect the Nifty to remain in consolidative phase for the October series with upside being capped at 26,300 – 26,500 levels, said Sahaj Agarwal, Senior Vice President, Head of Derivatives Research at Kotak Securities:
On the downside, a reversal attempt is yet to mature based on the price movements. Currently short term support is placed at 24,700 levels based on recent volatility, Sahaj Agarwal added.
Meanwhile, the Bank Nifty futures shed 1.7 per cent on the back of a 17.7 per cent rise in OI; indicating possible short build-up. The premium, however, jumped from 409 points to 537 points.
Technically, the Bank Nifty formed a big red candle on the daily scale, indicating weakness. Moreover, the index experienced a short-term trend line breakdown and closed below the 100-DSMA support, indicating further weakness, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates.
On the upside, the Bank Nifty will face immediate resistance near the 51,000 – 51,100 levels. On the downside, the psychological level of 50,000 will act as important support, followed by 49,650, Hrishikesh Yedve said.
FII, DII trading activity in F&O on October 07 – Who bought and who sold in the derivatives market on Monday?
Foreign institutional investors (FIIs) were aggressive net sellers for the third straight trading day on Monday. As per data available from the NSE, FIIs net sold 1,17,711 contracts of index futures for a consideration of Rs 7,987.16 crore. In the process, the FIIs have not net sold over 3.5 lakh contracts of index futures in just three trading sessions.
Pursuant to which, the FIIs long-short ratio from an extremely bullish bias of 4.4:1 had dropped to a bearish 0.88:1 in just five trading sessions. This is the first time since August 14 that the FIIs long-short ratio in index futures has dipped below 1 – indicating a clear change in stance from bullish to bearish.
The NSE data shows that FIIs net sold 70,440 contracts of Nifty futures worth Rs 4,404.26 crore; 44,127 contracts of Bank Nifty futures for Rs 3,387.70 crore and 2,113 contracts of MidCap Nifty futures.
Amid the net sales in Nifty futures, FIIs open interest (OI) in Nifty futures dropped by 5.9 per cent yesterday; and overall has witnessed a 21.2 per cent decline since September 27 – the day the long-short ratio peaked – thus clearly indicating long unwinding.
However, in the case, of Bank Nifty the OI rose over 52 per cent on Monday. The overall OI has soared over 131 per cent in the same period – thus indicating aggressive short building here. The MidCap Nifty futures also saw 10.6 per cent addition of OI yesterday.
On the other hand, retail investors from an extremely bearish bias on September 27 have now turned fairly bullish. The long-short ratio from a low of 0.52:1 has jumped to 1.35:1 – thus implying more than one long position in index futures for every short bet.
Domestic institutional investors (DIIs) long-short ratio dipped to 0.54 in index futures. Whereas, proprietary traders have also turned bullish as the long-short ratio jumped from 0.68 to 1.06 on Monday.
Key Insights from Nifty, Bank Nifty options data
Bearish sentiment prevails in the options market, with call writing surpassing put writing for the third straight session amidst rising global uncertainties and upcoming geopolitics events, said Dhupesh Dhameja, Technical Analyst at SAMCO Securities.
Notable open interest is seen at the 25,500 call (68.81 lakh contracts) and 24,000 put (55.41 lakh contracts), with trading concentrated between 24,900-25,000 calls and 24,700-24,800 puts, suggesting strong resistance near 25,000-25,200.
Increased put activity between 24,500 – 24,800 indicates a shift in call writers’ stance, while put unwinding hints at mounting bearish pressure. The put-call ratio (PCR) has declined to 0.45 from 0.56, reaffirming the bearish trend, Dhupesh Dhameja explained.
In case of Bank Nifty, significant open interest is noted at the 52,000 call (30.57 lakh contracts) and the 50,000 put (16.18 lakh contracts), with concentrated trading between 50,800-50,900 calls and 50,500-50,600 puts, suggesting a mildly bearish sentiment.
Resistance remains at 50,900-51,200 as call writers dominate. Increased put activity between 50,000-50,500 signals a shift in positioning to lower levels, while put unwinding reflects mounting bearish momentum.
The put-call ratio (PCR) has edged down to 0.53 from 0.63, indicating a cautious market stance. Max pain is positioned at 51,500, a crucial level for upcoming movements, the analyst note from SAMCO Securities stated.
Bullish & Bearish stocks
Among individual F&O stocks, AU Small Finance Bank witnessed some long build-up as the stock rose 2 per cent on the back of 15.3 per cent increase in OI. MphasiS and IDFC First Bank too saw some buying interest on Monday.
On the other hand, short build-up was visible in Federal Bank, Axis Bank and HDFC Bank. These stocks declined in the range of 2- 5 per cent alongside up to 13 per cent rise in OI. SBI, PNB and Shriram Finance also witnessed selling bias.
Stocks in F&O ban period on Tuesday, October 08
A total of 9 stocks are placed under the futures & options ban period on Tuesday. Bandhan Bank, Birlasoft, GNFC, Granules India, Hindustan Copper, IDFC First Bank, Manappuram Finance, PNB and RBL Bank.
