 "Nifty, Bank Nifty form shooting star on daily chart; consolidation ahead?")
F&O Insights for Friday, September 20, 2024: Benchmark indices continue to trade near record high levels a day after the US Fed rate cut as global mood remains upbeat. The BSE Sensex has gained 300 points at 83,500 levels in early deals, while the NSE Nifty 50 was again seen testing the 25,500 levels.
The futures and options data show, that the FIIs continue to hold bullish bets in index futures, while DIIs and retail investors are weighed on the shorter side of trade.
On Thursday, the Nifty September futures rose 0.4 per cent, while the OI declined by 1.6 per cent as traders pared some positions post the US Fed rate action. Interestingly, the premium in Nifty futures rose to 73 points as against 18 points the day earlier. For the records, the NSE Nifty hit a new all-time high at 25,612, but closed at 25,416 - almost 200 points lower from the top yesterday.
In doing so, the Nifty formed a Shooting Star-like candle stick pattern on a daily scale near its all-time high, signalling exhaustion of buying pressure or some short-term profit booking in the index, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates in a note.
On the upside, 25,600 - 25,620 levels will act as an immediate hurdle for the Nifty. If the index sustains above 25,600 strongly, it could test the 25,750 levels in short term. On the downside, 25,280-25,300 serves as immediate support base for Nifty followed by 21-DEMA support, which is placed near 25,120 levels. As long as Nifty stays below 25,620, a "Sell on Rise" strategy is advisable for traders, the analyst added.
The Bank Nifty ended higher for the sixth straight trading session yesterday. The index was up 0.5 per cent, while the futures gained 0.8 per cent as the premium jumped from 7 points to 140 points. The OI also rose by 0.9 per cent. Bank Nifty has surged 4 per cent in the last six trading days.
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Technically, the Bank Nifty too has formed a shooting star candlestick pattern on a daily scale, indicating decrease in buying interest in the index. The high of this Shooting star candlestick pattern, which is around 53,350, will act as an immediate hurdle for the index.
Until Bank Nifty crosses 53,350 levels, a "Sell on rise" strategy should be adopted in Bank Nifty for the short-term traders. If Bank Nifty sustains above this level, the rally could extend toward 53,500 - 53,800. On the downside, 52,750 and 52,000 will serve as support points, the analyst from Asit C. Mehta said.
Key Insights from Nifty options data:
The Nifty PCR for the September monthly expiry stands above 1.18, showing higher open positions in Puts versus Calls. This also implies presence of higher Put Writers, thus possible limited downside ahead.
Among Calls, highest OI (open interest) stands at 26,000, 25,500 and 25,800 Calls with active trading seen at 25,400 and 25,600 Strikes as well. The OI and premium action suggests likely resistance for the Nifty around 25,700 - 25,750 zone.
On the other hand, highest OI in Puts stands at 25,000 Strike with notable Put writing seen at 25,500 Strike. Data shows that the Nifty may seek support around 25,350 levels in case of a dip.
FII, DII trading activity in F&O - Here's all you need to know about who bought and who sold in the derivatives market on September 19?
As per data available from the NSE, FIIs net sold 14,026 contracts of index futures on Thursday worth Rs 924.28 crore. FIIs were net sellers for the second straight day in Nifty futures, sold 9,505 contracts yesterday; while sold 1,934 contracts of Bank Nifty futures and 2,896 contracts of MidCap Nifty futures.
However, the overall open interest (OI) in index futures remained unchanged, as data showed that the foreign investors cut exposure in Nifty futures, while added OI in Bank Nifty.
Pursuant to which, FIIs long-short ratio in index futures declined by 11 basis points (bps) to 2.10:1; still implying presence of more than 2 long positions in index futures for every short bet.
Meanwhile, retail investors' increased bets both on the long and short sides of trade as the long-short ratio moved up by 3 bps to 0.64. A total of 16,695 contracts were added on the long side of trade in index futures, while OI in short positions rose by 7,246 contracts.
Whereas, domestic institutional investors (DIIs) continued to hold near about 2 long positions for every 3 bets on the short side of trade.
Bullish & Bearish stocks
United Breweries (UBL) saw significant long build-up on Thursday, as the stock surged 4.3 per cent on the back of 11.8 per cent increase in OI. Naukri and AU Small Finance Bank were the other two stocks with notable longs additions.
On the other hand, Indus Towers saw short build-up as the stock tumbled 8.5 per cent backed by an 8.1 per cent rise in OI. Chambal Fertilisers, Deepak Nitrate and Jindal Steel also witnessed a dip in price alongside rise in OI; suggesting possible short build-up at these counters as well.
Stocks in F&O ban period on Friday
A total of 12 stocks are placed under the F&O ban today - Aarti Industries, Biocon, Birlasoft, Chambal Fertilisers, GNFC, Granules India, LIC Housing Finance, National Aluminium, OFSS, PNB, RBL Bank and SAIL.