F&O Insights: Nifty pivot at 25,000; India VIX hints bullish bias building

Derivatives market update for Sept 12: Among individual stocks, Page Industries saw long buildup, while Aarti Industries and Tata Motors saw positions added on the short side of trade.

F&O Insights for Thursday, September 12, 2024: The NSE Nifty 50 index has been gyrating around the 25,000 psychological mark and seeking support around its short-term moving average on the daily scale. 

Trading action in the derivatives segment was tepid yesterday even as Nifty tumbled over 1 per cent in intra-day deals. The volumes were on the lower side, with individual stock action taking centre-stage.

Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas in a note said, the Nifty has faced resistance in the 25,100 - 25,150 zone where the hourly upper Bollinger band and the 61.82 per cent Fibonacci retracement level is placed.

 

On the downside, support zone is placed at 24,800 - 24,750. The Bollinger bands are contracting suggesting rangebound price action over the next few trading sessions. The range of consolidation is likely to be 24,800 - 25,200, the analyst added.

With global cues turning favourable on Thursday, will the Nifty attempt an upside breakout? Here's what the cues from the futures & options segment suggest:

Yesterday, the Nifty September futures dipped 0.6 per cent amid negligible rise in open interest (OI), suggesting lack of participation at lower levels. The premium in Nifty futures, however, declined to lowest point for the series to 20-odd points.

Whereas, the Bank Nifty futures shed 0.5 per cent alongside 5 per cent increase in OI, suggesting possible short additions. The premium in Bank Nifty futures, however, rose to 114 points from 99 points the day before.

Key Insights from Nifty, Bank Nifty options data:

In Nifty options, significant open interest is observed at the 24,500 Put (69.91 lakh contracts) and 25,000 Call (1.16 crore contracts), reflecting a bearish outlook as sellers hold strong positions at lower level, highlighted Dhupesh Dhameja, Technical Analyst at SAMCO 

Active trading was concentrated around the 24,900-24,950 Calls and 24,700-24,800 Puts. The Put-Call Ratio (PCR) dropped to 0.60 from 0.78, highlighting a cautious market environment with call writers in control. The Max Pain level remains at 25,000, a critical point for any potential trend reversal, the analyst added.

Dhupesh at the same time added that, in spite of a 2 per cent increase, India VIX remains below 15; this suggests that bullish momentum may be gaining strength as buyer interest grows.

In case of Bank Nifty, significant open interest is concentrated at the 51,100 Call (71.67 lakh contracts) and 51,000 Put (1.36 crore contracts), indicating a neutral outlook as traders adjust positions at higher levels.

Active trading was centred around the 51,100-51,200 Calls and 50,900-50,800 Puts. The Put-Call Ratio (PCR) has dipped slightly from 0.84 to 0.76, signalling a sideways to bearish sentiment, with call writers maintaining dominance at higher levels. The Max Pain point remains at 51,000, a key level for any potential market shift.

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 11?

As per data from the NSE, FIIs net sold 6,286 contracts of index futures on Wednesday worth Rs 476.65 crore. FIIs net sold 5,778 contracts of Bank Nifty futures and 729 contracts of MidCap Nifty futures, while net bought 271 contracts of Nifty futures.

FIIs increased positions in Nifty futures by 1 per cent, while reducing the OI by 4 per cent in Bank Nifty futures yesterday. Pursuant to which, FIIs long-short ratio in index futures declined wee bit to 1.75:1 – this ratio implies that foreign investors hold around 5 long positions in index futures for every 3 bets on the short side. The FIIs longs in index futures stood at 63.58 per cent as of September 11.

At the same time, retail investors' long-short ratio in index futures remained more or less unmoved at 0.89:1; implying a slight bias on the short side of trade.

Domestic institutional investors (DIIs) long-short ratio also was unmoved around 0.57:1; suggesting 3 long bets for every 5 short positions in index futures.

Bullish & Bearish stocks

Page Industries saw long buildup on Wednesday as the stock price gained 3.5 per cent on the back of 6.4 per cent increase in open interest. Bajaj Auto was the only other stock with notable buying activity in the derivatives segment yesterday.

On the other hand, Aarti Industries and Tata Motors saw aggressive short buildup with the stocks down 4.5 per cent and 6.3 per cent, respectively, on the back of 17.9 per cent and 12.8 per cent jump in OI. Birlasoft, Ashok Leyland and ONGC were the other key stocks with visible selling bias.

Stocks in F&O ban period today

Aarti Industries entered the F&O bank period, while Biocon moved out of the ban. Whereas, others such Aditya Birla Fashion & Retail, Balrampur Chini, Bandhan Bank, Chambal Fertilisers, Hindustan Copper and RBL Bank continued to remain in the F&O ban period; thus restricting creation of fresh positions in these counters.