F&O Cues: Premium jumps in Nifty, Bank Nifty futures; options flag caution

Derivatives market update for Sept 06: The Nifty PCR dipped from 0.74, while Bank Nifty to 0.78; reflecting a cautionary trend said Dhupesh Dhameja of SAMCO Securities. Max Financial see short buildup

F&O Insights for Friday, September 06, 2024: The NSE Nifty 50 index seems to be taking a breather following the recent non-stop 14-day rally. Yesterday, the Nifty languished in a tight range, and eventually ended 0.2 per cent lower at 25,145.

Technically, there have been no significant alterations in the levels or even in the Nifty outlook, said Osho Krishan, Senior Analyst - Technical & Derivatives at Angel One Ltd. Adding, that the lack of participation was evident with the narrower range of the benchmark. 

On the specific level, the 25,100-25,000 range is likely to be seen as strong support and anticipated to provide a cushion for any intra-day blips. An authoritative breakdown could only disrupt the ongoing view and drag the index lower. Additionally, on the higher end, a series of resilience could be seen from 25,250-25,300, followed by 25,330-25,350 in the comparable period, Osho Krishan said in a note.

 

Meanwhile, in the derivatives segment, the Nifty September futures ended a tad in red, alongside 2.3 per cent decline in the open interest (OI). More importantly, the Nifty futures premium jumped to 92 points, the highest in the last four trading sessions.

On similar lines, the Bank Nifty September futures surged to 255 points yesterday as against 207 points in the previous trading session. In the process, the Bank Nifty futures ended 0.2 per cent higher while the spot index rose 0.1 per cent. The OI was down 1.6 per cent.

Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd believes that as long as the Bank Nifty stays above 50,950, a 'buy on dips' strategy should be recommended. On the upside, Bank Nifty may attempt to test the 52,000 level, which corresponds to the target of the double bottom pattern.

Key Insights from Nifty, Bank Nifty Options data:

The Nifty options market suggests that a bearish bias has emerged with increased call writing over the last five sessions signalling downside pressure. Significant open interest is seen at the 25,150 Put (3.36 crore contracts) and the 25,200 Call (3.27 crore contracts), indicating strong resistance at the current level. The Put-Call Ratio (PCR) dropped from 0.82 to 0.74, reflecting a cautionary trend as call writers dominate, said Dhupesh Dhameja, Technical Analyst at SAMCO Securities in a note.

In case of the Bank Nifty, significant open interest is observed at the 51,500 Call (27.70 lakh contracts) and the 51,000 Put (15.10 lakh contracts). Active trading is also concentrated around 51,500-51,700 Calls and 51,200-51,300 Puts.

The Put-Call Ratio (PCR) has declined from 0.88 to 0.78, signalling a shift towards a sideways to bearish sentiment. The index has remained range-bound between 51,500 and 51,300 over the last five sessions, reflecting muted momentum. The Max Pain Point at 51,500 is a key level to monitor for any potential directional shift, Dhupesh Dhameja added.

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 05?

As per data from the NSE, FIIs net sold 10,380 contracts of index futures on Thursday for a consideration of Rs 670.19 crore. FIIs net sold 12,498 contracts of Nifty futures, 2,095 contracts of Bank Nifty futures and bought 4,193 contracts of MidCap Nifty futures.

Interestingly, FIIs have sold a large chunk of Nifty futures bought during the rollover period; they were net sellers in Nifty futures for the fourth straight day on September 05. Similarly, they have liquidated nearly a fourth of Bank Nifty futures bought during the same. On the other hand, FIIs have been quietly building  long positions in MidCap Nifty futures. They have been net buyers in Nifty MidCap futures in 10 out of the last 14 trading sessions.

Pursuant to which, FIIs long-short ratio in index futures stands at 2.1:1 – this ratio implies that foreign investors hold more than 2 long positions in index futures for every bet on the short side of trade. The FIIs longs in index futures stood at 68.12 per cent as of yesterday.

At the same time, retail investors' long-short ratio in index futures stands at 0.77; implying 4 bets on the short side for every 3 long positions.

Meanwhile, domestic institutional investors (DIIs) positions added fresh bets on the short side of trade in index futures on Thursday, they net sold 15,491 contracts. DIIs long-short ratio in index futures stands at 3:2; meaning 3 shorts for every 2 longs.

Bullish & Bearish stocks

Syngene International saw long buildup in trades on Thursday as the stock rallied 3 per cent on the back of 15 per cent jump in its open interest (OI). Muthoot Finance, GMR Infra and IPCA Labs also witnessed notable addition of OI on the long side.

On the other hand, Max Financial Services saw a significant 56 per cent surge in OI, while the stock dipped 1.4 per cent yesterday; indicating possible short buildup. Similarly, Chambal Fertilisers, Reliance Industries and Bata India were few of the other prominent stocks to register a dip in stock price accompanied with rise in OI on Thursday.

Stocks in F&O ban period

A total of 7 stocks are placed under the F&O ban period - meaning not allowed for taking fresh positions today - Aditya Birla Fashion & Retail, Balrampur Chini, Bandhan Bank, Biocon, Chambal FErtilisers, Hindustan Copper and RBL Bank are the 7 stocks.