Bullish cues: Notable Put-writing seen for first time in 2 mths; F&O data

Derivatives market update for Nov 25: FIIs net purchased 46,700 contracts of index futures on Friday - the most in a single day since September 22; thus reducing some of their short bets.

Futures & Options (F&O) Insights for Monday, November 25: Friday's strong surge in equity market seems to have turned the tide in favour of the bulls for the Nifty in the near-term, shows the F&O data from the NSE.

 

While data shows, that foreign investors reduced some of their short bets in index futures, aggressive Put writing indicates growing confidence in market bulls. Gift Nifty futures were seen quoting around 24,300 levels; hinting at further gains on the NSE benchmark on Monday.

 

Technically, the Nifty formed a large green candle, indicating strength on Friday. Furthermore, the index crossed the 23,800 barrier and closed above it, confirming strength, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates.

 

Hrishikesh now expects the Nifty to face resistance in the 24,040-24,050 range, while find strong support around 23,800 levels. If the Nifty manages to sustain above 24,050 then rally could extend towards 24,200-24,300 levels, the analyst adds.

 

Key Insights from Nifty, Bank Nifty options data

 

The Nifty options market reflects growing optimism as the Nifty staged a strong recovery. Notable put-writing activity was recorded for the first time in two months, indicating a bullish stance among traders, said Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities.

 

Key positions were concentrated in the 23,800–24,000 Call range and the 23,700–23,500 Put range, highlighting immediate resistance at 24,000 and support near 23,500.

 

The put-call ratio (PCR) rose to 1.15 from 0.85, hinting at growing bullish sentiment. The max pain level at 23,700 suggests limited downside potential in the near term, Dhupesh explained.

 

In the case of Bank Nifty, key positions were concentrated in the 51,300–52,000 Call range and the 50,500–51,000 Put range, reinforcing immediate resistance at 52,000 and support at 51,000.

 

The put-call ratio (PCR) improved to 1.16 from 0.95, and the max pain level for the index now stands at 51,000, Dhupesh added.

 

FII v/s Retail v/s Proprietary traders: Who is bullish/ bearish?

 

Foreign institutional investors (FIIs) were net buyers of 46,712 contracts of index futures worth Rs 3,018.47 crore on Friday - the highest single-day net gain since September 22. FIIs net bought 25,523 contracts of Nifty futures to the tune of Rs 1,516.72 crore; 13,511 contracts of Bank Nifty futures for Rs 1,031.29 crore and 7,504 contracts of MidCap Nifty futures worth Rs 460.35 crore.

 

As a result of which, the NSE F&O data shows that FIIs open interest (OI) in Nifty and MidCap Nifty futures jumped by 7 per cent each, while OI in Bank Nifty declined by 3.2 per cent on Friday.

 

Pursuant to which, FIIs long-short ratio in index futures rose to 0.46 - now suggesting presence of nearly 2 short positions for every bearish trade as against the early 3:1 ratio. This shows that foreign investors have cut down short positions in index futures. 

 

Whereas, proprietary traders' long-short ratio declined by 5 basis points (bps) to 0.48 - this ratio indicates proprietary traders hold more than 2 bearish bets for every long trade in index futures.

 

On the other hand, retail investors' continue to hold bullish bets in index futures at 2:1 ratio. 

 

Stocks in F&O ban period today, November 25

 

Aarti Industries, Adani Enterprises, GNFC, Granules India, Hindustan Copper, Indraprastha Gas and National Aluminum are the 7 stocks placed under F&O ban period on Monday.