 "Nifty weekly expiry in focus; FIIs pile up bearish bets in Bank Nifty")
Futures & Options (F&O) Insights for Thursday, October 10, 2024: TCS earnings, trend in Tata Group stocks post the demise of Rata Tata and the weekly Nifty options expiry is likely to guide the market trend today.
For markets to perform well going ahead, strong conviction is required and earnings season will be the key thing to look out for over the next few weeks, said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
The NSE Nifty October futures and the Bank Nifty had ended marginally in red on Wednesday, after posting strong intra-day gains post the RBI policy announcement; wherein the Central Banker left key rates untouched but changed the policy stance to 'Neutral'.
Meanwhile, here are the cues from futures & options segment:
The Nifty October futures quoted at 110 points premium, and the open interest (OI) declined by over 1 per cent yesterday. Whereas, Bank Nifty futures traded at 367 points premium and the OI rose by nearly 7 per cent.
The volatility index, INDIA VIX, cooled off by 3.44 per cent, settling at 14.09, indicating a drop in market volatility, said Hrishikesh Yedve, AVP Technical and Derivatives Research of Asit C. Mehta Investment Interrmediates Ltd.
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Technically, on the daily chart, the Nifty formed a small red candle followed by an insider bar candlestick and is still holding above short-term trend line support. As long as the index holds above the low of 24,690, levels of 25,150 – 25,350 could be possible, said the analyst.
FII, DII trading activity in F&O on October 09 - Who bought and who sold in the derivatives market on Wednesday?
Foreign institutional investors (FIIs) were net sellers in the F&O segment for the seventh straight trading session on Wednesday. As per data available from the NSE, FIIs net sold 53,714 contracts of index futures for a consideration of Rs 3,652.68 crore.
The NSE data shows that FIIs net sold 34,385 contracts of Nifty futures worth Rs 2,167.43 crore, 18,739 contracts of Bank Nifty futures and 1,087 contracts of MidCap Nifty futures.
The data shows that FIIs open interest (OI) in Nifty futures has dropped to its lowest point in nearly two months; thus clearly indicating unwinding of most of the long positions over the last seven trading sessions. Meanwhile, FIIs have added aggressive short bets in Bank Nifty futures. The OI in Bank Nifty futures has jumped over 200 per cent since the start of this month.
Pursuant to which, the FIIs long-short ratio in index futures dropped to 0.63 - its lowest point since June 11.
Meanwhile, retail investors' long-short ratio jumped to 1.55 from 1.44. This ratio implies that retail investors now hold more than 3 long positions in index futures for every 2 short trades. Retail investors were now the most bullish in more than four months.
Proprietary traders, too, increased their long bets in index futures, with the ratio climbing to 1.27 as of Wednesday. This is the highest in nearly two months.
Whereas, domestic institutional investors (DIIs) long-short ratio in index futures remained steady at 0.64; meaning 2 long positions for every 3 short bets.
Key Insights from Nifty, Bank Nifty options data
Nifty has broken its momentum level and is expected to trade with limited upside for the October series, said Sahaj Agarwal, Senior Vice President, Head of Derivatives Research, of Kotak Securities.
In-line with the Nifty, many frontline stocks have broken their trend levels and entered a phase of consolidation and possible correction. We expect selective participation in the near term with limited upside in Nifty50.
OI build-up is seen at 25,500 Call and 25,000 Put for the weekly series suggesting a possible trading range for the near term. Immediate support is placed at 24,700 while resistance is seen at 25,200, Sahaj Agarwal added.
On the monthly contracts, highest open interest is seen at 27,000 Call and 25,000 Put. Highest new OI addition was seen at 25,500 Call and 24,400 Puts in the weekly and at 27,000 Call and 25,300 Puts in monthly contracts, explained Anand James, Chief Market Strategist of Geojit Financial Services.
FIIs decreased their future index long position holdings by 12.44 per cent, and increased future index shorts by 7.26 per cent and in index options; 18.79 per cent decrease in Call longs, 10.09 per cent decrease in Call short, 18.50 per cent decrease in Put longs and 6.83 per cent decrease in Put shorts, the analyst added.
Bullish & Bearish stocks
Among individual F&O stocks, Tata Chemicals and Max Financial Services saw fresh long build-up on Wednesday as these stocks rose up to 2.7 per cent backed by around 9 per cent increase in OI. Among others, Exide Industries and Trent saw some buying activity.
Meanwhile, short build-up was visible at Shree Cements and Havells India counters as the stock slipped up to 2.5 per cent alongside near 13 per cent increase in Federal Bank and Mahindra Finance also witnessed some selling pressure.
Stocks in F&O ban period on Thursday, October 10
A total of 11 stocks are placed under the futures & options ban period today. Bandhan Bank, Birlasoft, GNFC, Granules India, Hindustan Copper, IDFC First Bank, Manappuram Finance, PNB, RBL Bank, SAIL and Tata Chemicals.