F&O Insights: Nifty, Bank Nifty premium rises, PCR dips; check key levels

Derivatives market update for Sept 17: The premium in Nifty Sept futures jumped to 58 pts, and Bank Nifty to 100 pts; whereas, the PCR declined to near 1 levels indicating positive to sideways trend.

F&O Insights for Monday, September 17, 2024: Benchmark equity indices - the Sensex and the Nifty continue to trade at record high levels ahead of the all-important US Federal Reserve policy decision on September 18. 

Yesterday, in low-volume affair, the NSE Nifty September futures rose 0.3 per cent; with premium surging to 59 points as against mere 15 points the day before. The overall open interest (OI) in Nifty futures declined by nearly 3 per cent.

The small-bodied candlestick formation on the Nifty at lifetime highs suggests some tentativeness among the bulls, although the optimistic undertone and broader participation are vital signs for a secular uptrend, said Osho Krishan, Senior Analyst - Technical & Derivatives at Angel One in a note.

 

On the level-specific front, 25,500 - 25,600 is anticipated to provide some resilience to the bullish sentiments in the upcoming period. In the interim, any downward movement towards 25,300 - 25,200 is expected to act as a buffer and could present an opportunity to strategically increase long positions in the Nifty, Osho Krishan added.

Today, apart from the anticipated Fed rate cut in the near-term, the market will seek cues from WPI-inflation numbers to be released around noon. 

Similarly, the Bank Nifty gained 0.6 per cent while the OI dipped by 4.3 per cent. Further, the difference between the futures and spot value turned from a 9 points discount to 108 points premium yesterday.

Technically, the Bank Nifty sustained above the cup-and-handle breakout, which indicates potential strength, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates in a note.

In the short term, Bank Nifty could test levels of 52,800 – 53,000, with a medium-term target of 53,800. The 21-DEMA support is currently placed near 51,310. Therefore, a 'buy on dips' strategy is recommended for Bank Nifty as long as it stays above 51,300, Hrishikesh Yedve added.

Key Insights from Nifty, Bank Nifty options data:

In the options market, data shows a sideways bias for the Nifty with an equal writing observed in both Calls and Puts. Traders are awaiting a decisive break above 25,450 or below 25,300 for the next move, said Dhupesh Dhameja, Technical Analyst at SAMCO Securities in a note.

Significant OI is seen at the 25,000 Put (60.10 lakh contracts) and the 26,000 Call (95.50 lakh contracts), indicating a 'buy on dips' sentiment. Put writers are holding positions at lower levels, while call writers have shifted to higher levels.

Active trading is centred around the 25,400 - 25,500 Calls and 25,200 - 25,300 Puts. The Put-Call Ratio (PCR) has dropped to 0.98 from 1.09, signalling a shift from bullish to sideways as call writers take control. The Max Pain point stands at 25,800, a key level for potential market shifts, Dhupesh Dhameja added.

In case of Bank Nifty, significant OI is concentrated at the 53,000 Call (26.55 lakh contracts) and 51,000 Put (27.77 lakh contracts), suggesting a bullish outlook. Call writers have shifted positions to higher levels, making 53,000 a key resistance point.

Active trading is centred around the 52,200 - 52,300 Calls and 52,000 - 51,900 Puts. The Put-Call Ratio (PCR) has decreased from 1.54 to 1.01, signalling bullish sentiment as put writers take control. The Max Pain point is at 52,200, a critical level for potential market shifts, the analyst from Samco Securities 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 16?

As per data from the NSE, FIIs net bought 4,141 contracts of index futures on Monday for a consideration of Rs 332.09 crore. FIIs net bought 650 contracts of Nifty futures, 4,874 contracts of Bank Nifty futures while net sold 1,384 contracts of MidCap Nifty futures among others.

FIIs increased long bets in Nifty futures for the sixth straight trading session. FIIs open interest in Nifty futures rose by 0.3 per cent on net addition of 1,336 contracts yesterday. The overall OI in index futures, however, declined by 0.4 per cent, owing to some short covering in Bank Nifty and long unwinding in MidCap Nifty futures.

Pursuant to which, FIIs long-short ratio in index futures inched higher to 2.11:1 – 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 67.82 per cent as of September 16.

Meanwhile, retail investors' pared positions both on the long and short side of trade on Monday. Their long-short ratio in index futures dipped to 0.71:1. A total of 12,849 contracts of longs index futures were reduced, while shorts went down by 1,630 contracts.

There wasn't much change in domestic institutional investors (DIIs) bets, as the long-short ratio in index futures remained steady at 0.64:1; suggesting almost 3 short positions for every 2 long bets in index futures.

Bullish & Bearish stocks

Syngene International added fresh long positions in trades on Monday; the stock gained 1.8 per cent backed by a 12.8 per cent vault in the OI. Among others, Marico, Dixon Technologies and National Aluminium also saw some buildup of bullish bets.

On the other hand, Godrej Consumer Products witnessed a 2.6 per cent dip on the back of 14.2 per cent increase in OI; thus indicating short buildup at the counter. Similar developments of a dip in price alongside rise in OI were witnessed in Birlasoft, LIC Housing Finance and Astral.

Stocks in F&O ban period on Tuesday

A total of 10 stocks are placed under the F&O ban period today. Aarti Industries, Balrampur Chini, Bandhan Bank, Birlasoft, Chambal Fertilisers, GNFC, Granules India, Hindustan Copper, LIC Housing Finance and RBL Bank.