 "Nifty pivot stands at 24,800, Bank Nifty 51,800; shows F&O data")
Futures & Options (F&O) Insights for Friday, October 18, 2024: The Nifty October futures declined 0.8 per cent in trades yesterday alongside a 1.4 per cent decline in open interest (OI).
At present, the Nifty is at a crucial 'make or break' point on the daily chart, with the 24,700 – 24,600 zone, which aligns with the 89-EMA, acting as key support, said Rajesh Bhosale, Equity Technical Analyst at Angel One in a note.
A breakdown below this level could confirm a 'Head and Shoulders' pattern, signaling further downside pressure in the broader market. While previous corrections have often been met with buying interest, this time there appears to be structural damage across several sector-specific indices, the analyst added.
Meanwhile, the Bank Nifty October futures dropped 1 per cent, while the OI jumped by nearly 2 per cent on Thursday.
Technically, the Bank Nifty formed a big bearish candle, indicating weakness. On the downside, the 100-day Exponential Moving Average (100-DEMA) is placed near 51,050 levels. Thus, 51,000 - 51,050 shall offer good support for Bank Nifty in the short-term. If the index sustains below 51,000, further weakness could be expected, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates.
Key Insights from Nifty, Bank Nifty options data
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The Nifty options market continues to reflect a bearish sentiment, with call writers (Bears) dominating put writers (Bulls). This highlights traders are adopting cautious approach, said Dhupesh Dhameja, Technical Analyst at SAMCO Securities.
Significant open interest at the 24,750 strike calls (2.32 crore contracts) and 24,750 puts (2.21 crore contracts) indicates a bearish bias. Active trading in the 24,800 - 25,000 Call range and 24,500 - 24,700 Put range points to resistance near 24,800 - 25,000 and support between 24,500 - 24,700, Dupesh explained in a note.
The put-call ratio (PCR) dipped to 0.51 from 0.54, indicating increased control by call writers and suggesting the index is entering oversold territory. The max pain level at 24,800 remains a crucial point for Nifty's future movement.
In case of Bank Nifty, significant open interest is concentrated at the 52,000 strike calls (28.79 lakh contracts) and 51,000 puts (11.61 lakh contracts). Activity in the 51,300 - 51,500 Call range and the 51,100 - 51,200 Put range highlights resistance near 51,300 - 51,500 and support at 51,000 - 51,300, reflecting increased bearish sentiment.
The put-call ratio (PCR) declined to 0.67 from 0.97, indicating a shift towards bearish sentiment as call writers gain the upper hand. The max pain level at 51,700 serves as a crucial pivot point for the next move, the analyst from SAMCO Securities added.
FII, DII, Retail: Who bought and who sold on October 17?
Foreign institutional investors (FIIs) were net sellers of 1,716 contracts of index futures worth Rs 132.98 crore yesterday.
The NSE data shows that FIIs net sold 252 contracts of Nifty futures for a consideration of Rs 16.87 crore, and 1,606 contracts of Bank Nifty contracts worth Rs 124.86 crore. They net bought 74 contracts of MidCap Nifty futures on Thursday.
The data shows that FIIs open interest (OI) in Nifty futures contracts dropped below the 3 lakh mark as against a peak of 5.73 lakh contracts on September 24. In case of Bank Nifty and MidCap Nifty futures the OI stands at 1.33 lakh contracts and 62,100 contracts, respectively. The overall FIIs OI in index futures declined a shade below the 5 lakh mark.
Pursuant to which, the FIIs overall long-short ratio in index futures declined to 0.49 - its lowest point since June 07. The ratio implies that FIIs hold 2 short positions in index futures for every long open trade.
Meanwhile, retail investors' long-short ratio in index futures climbed to 1.68 - meaning more than 3 long positions in index futures for every 2 short trades.
Proprietary traders, however, pared some of their bullish bets. The long-short ratio dropped to 1.32 - down 17 basis points. Whereas, domestic institutional investors (DIIs) long-short ratio stood at 0.6s.
To summarize, F&O data reveals that FIIs are holding notable short positions in index futures; while retail and proprietary traders continue to hold bullish bets.
Bullish & Bearish stocks
Bajaj Auto saw significant short build-up as the stock plunged 13 per cent on the back of a near 38 per cent jump in OI. Among other F&O stocks, Deepak Nitrite, IndiaMart InterMesh, UltraTech Cement, Maurti, Hero MotoCorp and Mahindra & Mahindra also witnessed a selling bias.
On the other hand, Infosys and Tech Mahindra saw fresh long build-up as these stocks rose over 2 per cent each on the back of more than 6 per cent increase in OI.
Stocks in F&O ban period on Friday, October 18
A total of 14 stocks are placed under the futures & options ban period today. Bandhan Bank, Chambal Fertilisers, GNFC, Granules India, Hindustan Copper, IDFC First Bank, Indian Energy Exchange (IEX), L&T Finance, Manappuram Finance, National Aluminium, PNB, RBL Bank, SAIL and Tata Chemicals.