 "Nifty resistance stands at 25,000-mark; Bias for Bank Nifty turns positive")
Futures & Options (F&O) Insights for Monday, October 21: The Nifty October futures gained 0.4 per cent while the open interest (OI) declined by 2.1 per cent in the previous trading session.
More importantly, the NSE Nifty 50 index staged a smart recovery from its intra-day low of 24,570-odd levels.
The Nifty's 89-DEMA around 24,600 once again demonstrated its strength, offering solid support during the market's panic phase, Rajesh Bhosale, Equity Technical Analyst at Angel One in a note.
From a pattern analysis perspective, a break below 24,600 would confirm a "Head and Shoulders" pattern, signaling potential weakness, while a breakout above 25,250 would confirm a minor double-bottom structure, sparking optimism ahead of the festive week, the analyst added.
Meanwhile, the Bank Nifty October futures surged 1.6 per cent, while the OI declined by 13.8 per cent on Friday.
Key Insights from Nifty, Bank Nifty options data
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Despite the solid recovery, the Nifty options market continues to reflect cautious sentiment, with call writing (Bear activity) outweighing put writing (Bulls activity), indicating traders' wariness about further gains, said Dhupesh Dhameja, Technical Analyst at SAMCO Securities.
The increased call writing at 24,900 - 25,000 suggests sellers are setting up significant positions at these key psychological levels, while put writers cautiously add positions at lower levels amid bearish momentum.
The put-call ratio (PCR) rose to 0.75 from 0.51, reflecting a shift towards a bearish sentiment as call writers maintain dominance. The max pain level at 25,000 remains a critical threshold for future market moves, said Dhupesh Dhameja in a note.
In case of Bank Nifty, the options data reveals significant open interest at the 53,000 strike calls (18.59 lakh contracts) and 51,500 strike put (27.49 lakh contracts). Activity is concentrated in the 52,000 - 52,200 Call range and the 51,800 - 51,900 Put range, pointing to resistance near 52,200 and support around 51,800.
The Put-Call Ratio (PCR) has surged to 1.26 from 0.67, reflecting a shift towards positive sentiment as put writers strengthen their stance. The max pain level at 52,000 serves as a pivotal point for the next move, the analyst from SAMCO Securities stated.
FII, DII, and Retail: Who bought and who sold on October 18?
Foreign institutional investors (FIIs) were net buyers in index futures after three straight days of selling; they net purchased 7,812 contracts of index futures worth Rs 679.07 crore on Friday.
The NSE data shows that FIIs net sold 5,559 contracts of Nifty futures for a consideration of Rs 345.02 crore; while net bought 12,150 contracts of Bank Nifty futures worth Rs 950.06 crore and 254 contracts of MidCap Nifty futures for Rs 16.58 crore.
The data shows that FIIs open interest (OI) in Nifty futures contracts increased by 0.7 per cent to 3 lakh contracts. The OI in Bank Nifty futures dipped by 5.5 per cent to 1.26 lakh contracts; while the overall FIIs OI in index futures eased by 1.1 per cent to 4.93 lakh contracts.
Pursuant to which, the FIIs overall long-short ratio in index futures rose a wee bit to 0.51. This ratio implies that FIIs hold 2 short positions in index futures for every long open position.
Meanwhile, retail investors' long-short ratio in index futures climbed to 1.74 - its highest level since June 06. Retail investors now hold nearly 7 long bets in index futures for every 4 short trades.
Proprietary traders pared some of their bullish bets for the second straight day. The long-short ratio dropped to 1.18 from 1.32. This ratio implies that proprietary traders still hold more than one bullish bet in index futures for every bearish position.
Whereas, domestic institutional investors (DIIs) long-short ratio remained steady at 0.62.
Bullish & Bearish stocks
HDFC Life and Abbott India have witnessed some buying interest in recent trading sessions.
On the other hand, Indraprastha Gas (IGL), LTTS and Mahanagar Gas (MGL) witnessed short build-up in trade on Friday. The gas-based stocks tumbled nearly 10 per cent each on the back of 18.7 per cent and 11.6 per cent increased in OI.
Stocks in F&O ban period on Monday, October 21
A total of 14 stocks are placed under the futures & options ban period today. Aarti Industries, Bandhan Bank, Birlasoft, Chambal Fertilisers, GNFC, Granules India, Hindustan Copper, IDFC First Bank, Indian Energy Exchange (IEX), L&T Finance, National Aluminium, PNB, SAIL and Tata Chemicals.