FIIs add fresh shorts in Nifty futures; F&O data hints at cautious stance

F&O cues for Nov 08: According to the options data, the max pain level for the Nifty now stands at 24,200, and for Bank Nifty at 52,100; says Dhupesh Dhameja of SAMCO Securities.

Futures & Options (F&O) Insights for Friday, November 08: For the last four trading sessions, the NSE Nifty 50 index has been swinging around 1 per cent or over 300 points in intra-day deals owing to the uncertainty around the US elections and Fed rate decision. 

 

With both the major events now out of the way - with Donald Trump winning the US Presidential Elections and Fed cutting rates by another 25 basis points - Indian stock market may look to stabilize and find its course in the coming sessions. The on-going Q2 earnings season may however trigger wild swings in individual shares.

 

 

Technically, the Nifty 50 index from its recent low of 23,816, bounced back and tested resistance at its 20-DMA (Daily Moving Average). Going ahead, the 20-DMA at 24,527 and the 100-DMA at 24,703 are likely to act as the key hurdles for the Nifty. On the downside, the recent lows could act as support; below which a dip towards the 200-DMA seems likely. The 200-DMA stands at 23,500 levels.

 

Key Insights from Nifty, Bank Nifty options data

 

The Nifty options data reflects a cautious stance among traders, with dominant call writing signalling a largely bearish outlook. Call writing is notably concentrated in the 24,250 - 24,500 range, suggesting resistance near 24,500, while put activity is focused between 23,900 and 24,150, highlighting support around 24,000, explains Dhupesh Dhameja, Technical Analyst at SAMCO Securities.

 

The Put-Call Ratio (PCR) has slipped marginally from 0.67 to 0.65, reflecting an increasingly cautious sentiment. The 'max pain' level now stands at 24,200. 

 

In the case of Bank Nifty, the options data continues to indicate a bearish sentiment. Most of the trading activity is concentrated in the 52,100 – 52,500 Call range and the 51,500 – 52,000 Put range, indicating resistance near 52,300 – 52,500 and support around 51,700 – 52,000, Dhupesh said.

 

The Bank Nifty PCR held steady at 0.72, indicating a cautious outlook as call writers continue to maintain a stronghold with 'max pain' seen at 52,100, the analyst added.

 

FII v/s Retail v/s Proprietary traders: Who is bullish/ bearish?

 

Foreign institutional investors (FIIs) were net sellers of index futures worth Rs 1,146.43 crore on Thursday. FIIs net sold 17,460 contracts of Nifty futures worth Rs 1,064.54 crore, 364 contracts of Bank Nifty futures for Rs 27.81 crore and 582 contracts of MidCap Nifty futures for Rs 36.81 crore.

 

The NSE F&O data shows that the FIIs open interest (OI) in Nifty futures jumped by nearly 11 per cent, amid the net sales indicating likely addition of short positions. Whereas, the OI in Bank Nifty rose by 4.4 per cent, while MidCap Nifty futures remained steady.

 

Pursuant to which, FIIs long-short ratio in index futures dipped by 3 basis points (bps) to 0.32. This ratio implies that FIIs hold near about 3 short positions in index futures for every long trade.

 

Meanwhile, retail investors' increased their bullish bets in index futures by 10 bps to 2.07 - meaning more than 2 long positions for every short trade. Proprietary traders, on the other hand, hold the opposite trade with 2 shorts for every long in index futures.

 

Stocks in F&O ban period today, November 08

 

Aditya Birla Fashion Retail and Granules India are the only 2 stocks placed under F&O ban period on Friday.