Navratri 2024: How are FII, DII, retail investors positioned in the market?

Derivatives market update for Oct 03: Dhupesh Dhameja of SAMCO Securities sees max pain for Nifty at 25,750 and Bank Nifty at 52,900 based on the existing options data.

Futures & Options (F&O) Insights for Thursday, October 03, 2024: The weekly Nifty options expiry today could trigger additional market volatility, which seems to be coming with terms to the rising Israel-Iran conflict.

The Nifty October futures saw an overall 3 per cent decline in open interest (OI) on Tuesday; while Bank Nifty OI increased by 8.3 per cent.

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 Tuesday.

As per data available from the NSE, FIIs net sold 20,290 contracts of index futures on October 01 for Rs 1,495.48 crore. FIIs net sold 8,874 contracts of Nifty futures for a consideration of Rs 575.52 crore, and 12,040 contracts of Bank Nifty futures worth Rs 964.43 crore; while they net bought 1,220 contracts of MidCap Nifty futures.

 

On Tuesday, FIIs trimmed some of their long bets, but still the long-short ratio in index futures remains near about 4:1; implying presence of nearly 4 bullish bets against every short position.

The NSE data shows that, FIIs pared 7 per cent open positions in Bank Nifty, 1.8 per cent in MidCap Nifty and 0.2 per cent in Nifty.

Whereas, domestic institutional investors (DIIs) long-short ratio in index futures remained steady at 0.62; meaning 2 long positions for every 3 short bets.

Meanwhile, retail investors' reduced some of their short bets. Their long-short ratio rose to 0.6:1; this implies that retail investors hold 3 long positions in index futures for every 5 bets on the short side of trade. Retail short positions are at the lowest level since September 20.

Proprietary traders continue to hold significant short bets; the long-short ratio stands at 0.3:1. This implies proprietary traders hold near about 4 short positions in index futures for each long position.

Key Insights from Nifty, Bank Nifty options data

The Nifty options segment reflects a growing bearish sentiment, with call writing surpassing put writing for the second consecutive trading session, said Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities in a note.

Significant open interest was observed at the 26,000 call (1.14 crore contracts) and the 25,000 put (77.97 lakh contracts), signalling resistance at 26,000. Increased put activity in the 25,600 - 25,700 range indicates that call writers are pushing prices lower.

Additionally, unwinding of puts alongside the addition of calls highlights the dominance of bearish sentiment. The put-call ratio (PCR) has slightly increased to 0.77 from 0.69, reinforcing a cautious outlook as bears remain in control. Max pain stands at 25,750, marking a critical level for future movements, Dhupesh Dhameja highlighted.

In case of Bank Nifty, significant open interest was observed at the 53,000 call (87.95 lakh contracts) and the 52,900 put (93.82 lakh contracts), with heavy trading concentrated between the 53,100 - 53,200 calls and the 52,700 - 52,800 puts.

This activity indicates a slightly bearish sentiment, as call writers are positioning resistance at 53,000. Increased put activity in the 52,500 - 52,800 range suggests that call writers are adjusting to lower levels, while put unwinding signals growing bearish dominance, the analyst from SAMCO Securities said.

The put-call ratio (PCR) has slightly increased to 0.68 from 0.58, reinforcing caution as call writers remain in control. Max pain stands at 52,900, marking a critical level for future movements.

Bullish & Bearish stocks

Atul and Granules India added significant long bets, as the stocks rose 4.2 per cent and 3.7 per cent on the back of 25.1 and 22.9 per cent jump in open interest, respectively. Similarly, GNFC, Tata Chemicals and Deepak Nitrate also witnessed notable long build-up on Tuesday.

On the other hand, Muthoot Finance saw shorts added at the counter as the stock shed 3.9 per cent on the back of 17.4 per cent increase in open interest. Similarly, PNB, Birlasoft and Manappuram Finance also witnessed build-up of some short positions.

Stocks in F&O ban period on Thursday

These are the 4 stocks placed under futures & options ban period on Thursday - Bandhan Bank, Birlasoft, Hindustan Copper and RBL Bank.