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F&O Insights for Monday, September 16, 2024: The bulls made a strong comeback last week to take benchmark indices to new all-time highs, reversing the negative sentiment in the market.
"The occurrence of a bullish engulfing pattern immediately following a bearish engulfing pattern can indicate a significant shift in market sentiment, suggesting a potential reversal from bearish to bullish trends.” said Rahul Sharma, Director, Head- Technical & Derivative Research at JM Financial Services in a note.
For traders, the confirmation of this reversal is crucial. It is advisable to look for additional bullish candles following the bullish engulfing pattern to strengthen the case for a trend reversal. Indicators such as volume spikes or other technical indicators (like RSI or MACD) can also provide confirmation of the bullish sentiment, Rahul Sharma added.
The NSE Nifty 50 index had surged 2 per cent or 500 points last week despite a tepid close on Friday. The Nifty September futures edged 0.1 per cent on September 13 even as the Nifty ended in red, as future prices once again turned to premium from discount the day before.
Rajesh Bhosale, Equity Technical Analyst at Angel One in a note said that, while there are no immediate signs of weakness, the momentum oscillator RSI Smoothened has failed to surpass its previous high, signalling a '2-Point Negative Divergence' on the daily chart. Thus, with the upcoming Fed policy, booking profits at higher levels would be wise to account for potential volatility.
For levels, 25,200 serve as immediate support. On the higher side, 25,500 – 25,600 could act as resistance, as it aligns with the 'Bearish Wolfe Wave' reversal zone, followed by 25,800 being the next retracement resistance, Rajesh Bhosale added.
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Meanwhile, the Bank Nifty futures gained 0.3 per cent on Friday, while the OI dipped by 0.6 per cent. The September contract continued to trade at a discount for the second straight day.
On the daily chart, the Bank Nifty has witnessed a breakout of a cup and handle pattern, indicating strength. According to this pattern, the index could test 52,800 – 53,000 in the short term and 53,800 in the medium term, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd in a note.
Key Insights from Nifty, Bank Nifty options data:
The Nifty PCR for the September 19 expiry stands at 1.1:1; showing higher open positions in Puts versus Calls. This also implies presence of higher Put Writing versus Calls, thus a likely positive bias for the market.
Among Calls, highest OI (open interest) is visible at 26,000 Call followed by 26,500. Active trading was seen in 25,400 - 25,700 Calls. The premium action indicates likely resistance for the Nifty around 25,500 - 25,550 levels.
On the other hand, highest OI in Puts stands at 25,000 Strike followed by 24,500 and 25,300. On Friday, notable Put writing was seen at 25,200 - 25,400 Strikes; thus data hints at a support range of 25,150 - 25,250 levels.
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 13?
As per data from the NSE, FIIs net bought 18,504 contracts of index futures on Friday worth Rs 1,338.89 crore. FIIs net bought 6,030 contracts of Nifty futures; 11,499 contracts of Bank Nifty futures and 388 contracts of MidCap Nifty futures.
FIIs long-short ratio in index futures rose to 2.07:1 from 1.90:1; on account of two counts - the FIIs added fresh Nifty longs, and exited some of their short positions. As a result of which, FIIs OI in Nifty futures declined by 0.3 per cent despite net purchases on Friday.
Even as the FIIs net bought Bank Nifty and MidCap Nifty futures, the total OI in these two contracts also saw a decrease of 10.6 per cent and 0.6 per cent, respectively. Foreign investors total OI in index futures was down 2.2 per cent at the end of the trading session on September 13.
Meanwhile, retail investors' continue to hold more shorts in index futures as against long positions. Their long-short ratio dipped a wee bit to 0.74:1. A total of 11,587 contracts were added on the short side of trade in index futures, while longs dipped by 1,875 contracts.
Whereas, domestic institutional investors (DIIs) increased bets on the long side with the long-short ratio rising by 10 basis points to 0.63:1; thus now implying near about 2 long positions for every 3 bets on the short side of trade.
Bullish & Bearish stocks
On Friday, Muthoot Finance, Can Fin Homes and Bharat Forge saw buildup of fresh long positions as the OI rose by 19 per cent, 13.6 per cent and 11.2 per cent while the stock prices gained 1.4 per cent, 2.6 per cent and 1.8 per cent, respectively. On similar lines, OFSS and Apollo Tyres too saw some long additions.
On the other hand, Polycab India saw short buildup, as the stock dipped 1.4 per cent alongside a 9.9 per cent increase in OI. Godrej Consumer, Cummins India and Crompton Greaves also saw fresh positions being added on the short side of trade.
Stocks in F&O ban period on Monday
Aarti Industries, Balrampur Chini, Bandhan Bank, Chambal Fertilisers, Granules India, Hindustan Copper and RBL Bank are the 7 stocks placed under the F&O ban period today.
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