 "F&O Cues: FIIs continue to hold bearish bets, while retail remain long")
Futures & Options (F&O) Insights for Thursday, October 24: The Nifty October futures logged back-to-back losses in the last three days, and now the Nifty 50 index is seen quoting below the 100-DMA (Daily Moving Average) for the last three trading sessions.
Following yesterday's trading session, the Nifty formed an inverted hammer candle on the daily chart, which occurred after the breakdown of a head and shoulder pattern. This candlestick formation typically indicates strength, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates.
Thus, the 24,378 level serves as crucial short-term support. If Nifty holds above this, it might witness a pullback towards the 24,600 – 24,700 zone, which coincides with the neckline of the head and shoulder pattern. On the other hand, if Nifty breaks below 24,370, it could drift lower towards the 24,200 – 24,000 levels, the analyst said.
Meanwhile, the Bank Nifty had ended a range-bound session on a flat note yesterday. Bank Nifty is trading near its crucial support zone of 51,000 - 50,800 levels and can see pullback from those levels on back of buying interest in private sector banking stocks, said Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth in a note.
However, a close below 50,800 will weaken the overall structure of Bank Nifty; and the index could dip to 50,200 - 49,600 levels. On the higher side, the Bank Nifty will find strong resistance around 51,800 - 52,240 range, the analyst stated.
Key Insights from Nifty options data
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Nifty's monthly negative sentiment has taken a toll on the markets. Midcap stocks have underperformed significantly, while frontline value stocks have seen downside misalignment. The medium-term setup of the index remains positive, while the short term remains negatively biased, said Sahaj Agarwal, Senior Vice President, Head of Derivatives Research at Kotak Securities.
Open interest build-up is seen at the 24,000/ 24,500 Put and 25,000 Call strikes for the weekly and monthly expiries. For Nifty, we expect volatility to remain high and are waiting for a meaningful support level to mature for the possibility of a strong recovery, the note from Kotak Securities stated.
FII, DII, and Retail: Who bought and who sold on October 23?
Foreign institutional investors (FIIs) net bought 881 contracts of index futures for Rs 116.86 crore yesterday. The NSE data shows that FIIs net sold 2,393 contracts of Nifty futures to the tune of Rs 148.44 crore and 731 contracts of Nifty MidCap futures worth for Rs 46.49 crore; while net purchased 4,211 Bank Nifty futures contracts for Rs 322.99 crore.
The data shows that FIIs open interest (OI) in Nifty futures contracts dropped by 4 per cent to 2.83 lakh contracts. Whereas, the OI in Bank Nifty and MidCap Nifty increased by 2.1 per cent and 2.6 per cent, respectively.
Pursuant to which, the FIIs overall long-short ratio in index futures remained steady at 0.48. This ratio implies that FIIs hold little more than 2 short positions in index futures for every bullish position.
Meanwhile, retail investors' long-short ratio in index futures inched a wee bit higher to 1.76; while proprietary traders' pared some of their bullish bets. Domestic Institutional Investors (DIIs) increased their long bets in index futures to 0.68.
Stocks in F&O ban period on Thursday, October 24
A total of 10 stocks are placed under the futures & options ban period today. Aarti Industries, Bandhan Bank, Birlasoft, GNFC, Indian Energy Exchange (IEX), IndiaMart InterMesh, Manappuram Finance, NMDC, Piramal Enterprises and RBL Bank.