ATGL, IRB, Kalyan Jewellers top F&O buys in Jan thus far; FIIs short Nifty

Derivatives market data shows FIIs net sold 78,868 contracts of Nifty futures in first 4 trading days of Jan series while OI rose 74,992 contracts; thus implying build-up of short positions in Nifty.

In the first four trading sessions of the futures & options (F&O) January series the Nifty has witnessed notable volatility; with the index broadly swinging in the 23,450 - 23,900 range. Overall, the Nifty 50 index has declined merely 0.1 per cent, while the January futures contract has seen the open interest rise by nearly 19 per cent.  Technically, on the daily chart, the Nifty has held its trend line support and formed a bullish candle on Wednesday, indicating strength. On the upside, 200-day Simple Moving Average (200-DSMA) is placed near 23,880, which will act as a short term resistance, while 23,500 will serve as support, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates in a note.  In the short term, Nifty is expected to consolidate between 23,500 and 23,900, with a breakout on either side, further determining the direction of the market, the analyst added.  Meanwhile, the Nifty options market reflects indecision, with a balanced tussle between call and put writers with the Put-Call Ratio (PCR) rising to 1.03 from 0.93.  This equilibrium highlights traders' anticipation of a clear directional trigger. The 24,000-strike call witnessed significant open interest accumulation of 90.67 lakh contracts, reinforcing it as a formidable resistance level. Meanwhile, the 23,500-strike put gathered 78.32 lakh contracts, confirming it as a strong support level, explains Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities.    Nearly equal additions in both call and put options established a constrained range of 23,500–24,000, reflecting a persistent deadlock between market participants. The "max pain" level stands at 23,800 and suggests limited downside in the near term, Dhupesh added.  A breakout above 24,000 could ignite short-covering, propelling the index toward 24,500. On the flip side, a decisive break below 23,500 could accelerate bearish momentum, potentially dragging the index to the 23,150–23,000 region, the analyst concludes.  The data from the NSE F&O segment shows that FIIs (Foreign Institutional Investors) long-short ratio in index futures stands at the lowest point in seven months at 0.16. This ratio implies that FIIs hold more than 5 short positions in index futures for every buy-side trade.  Notably, FIIs open interest (OI) in Nifty futures has jumped by 57.4 per cent in the last four days on the back of persistent net selling in Nifty futures. Data shows, FIIs net sold 78,868 contracts of Nifty futures in the last four trading sessions while their OI increased by 74,992 contracts; thus implying build-up of short positions in Nifty.    On the other hand, retail investors remain bullish - with a long-short ratio of 2.14 - meaning more than 2 bullish bets on index futures for every short trade.  Among individual F&O stocks, Adani Total Gas (ATGL) has soared over 9 per cent in these four days backed by a solid 45.5 per cent jump in OI; implying build-up of long positions at the counter.  Similarly, IRB, Kalyan Jewellers and APL Apollo have also rallied in the range of 6 - 8 per cent each on the back of 33 per cent, 36 per cent and 47 per cent increase in OI, respectively.  Meanwhile, stocks such as Cyient, Prestige Estates, Jindal Stainless, Indian Bank and RBL Bank have witnessed bearish bets; as these stock prices witnessed a decline amid a rise in OI.