Options data hint at bearish bias for Nifty, Bank Nifty; FIIs trim shorts

F&O cues for Nov 21: Foreign investors open interest in Bank Nifty futures declined over 9 per cent as they net bought nearly 25,000 contracts on Tuesday, shows the NSE F&O data.

Futures & Options (F&O) Insights for Thursday, November 21: After having snapped its 7-day losing streak on Tuesday, the NSE Nifty is likely to be under pressure amid rising geo-political tensions and persistent FII selling in the cash market. Foreign investors, however, have covered some of their bearish bets in index futures, shows F&O data.  Technically, on a daily scale, the Nifty formed a doji candle, indicating uncertainty. The high of the doji candle is approaching the 23,780 level. Thus, 23,780 - 23,800 will serve as critical resistance for the Nifty, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates.  On the downside, the 50-Weekly simple moving average (WSMA) is placed near 23,300, which will provide short-term support for the index. Overall, the short-term trend is down till index remains below 23,800.  Echoing a similar view, Om Mehra, Technical Analyst at SAMCO Securities said, the Nifty formed a Gravestone Doji, reflecting indecision and probable resistance at higher levels. The broader trend remains confined within a downward-tilting parallel channel, with the support at 23,350, aligning with the lower channel.  In case of the Nifty Bank, the index formed a long-legged Doji, with a long upper wick, signalling selling pressure at higher levels. The index struggled to reclaim the 9-EMA, reflecting subdued short-term momentum.  The key resistance levels for Nifty Bank are placed at 51,000 followed by 51,200, aligning with the 20-EMA, if crossed, this could provide a relief rally. The lower Bollinger Band at 50,000 provides immediate support, the analyst from SAMCO Securities said.  Key Insights from Nifty, Bank Nifty options data  In the Nifty options market, rising Call-writing activity across the 23,500 – 24,000 zone indicates heightened selling pressure, while declining Put-writing volumes reveal cautious market sentiment, said Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities.  The put-call ratio (PCR) dropped to 0.65 from 0.73, reflecting a subdued outlook as bearish momentum strengthens. The max pain level stands at 23,700.  In the case of Bank Nifty, increased Call-writing between 50,600 and 51,000 signals strong seller control, while diminishing Put-writing indicates cautious sentiment among buyers. The pivot point for Bank Nifty stands at 51,000, Dhupesh added.  FII v/s Retail v/s Proprietary traders: Who is bullish/ bearish?  Foreign institutional investors (FIIs) were net buyers of 26,355 contracts of index futures worth Rs 1,983.52 crore on Tuesday. FIIs net bought 24,848 contracts of Bank Nifty futures for Rs 1,888.90 crore, mainly on account of short-covering. At the same time, FIIs net purchased 1,674 contracts of MidCap Nifty futures to the tune of Rs 102.42 crore, while net sold 148 contracts of Nifty futures worth Rs 9.24 crore.  As a result of which, the NSE F&O data shows that FIIs open interest (OI) in Nifty futures dipped by 3.9 per cent, and in MidCap Nifty futures by 0.1 per cent. The OI in Bank Nifty declined by 9.3 per cent, i.e. over 15,000 contracts were unwounded amid the short-covering.  Pursuant to which, FIIs long-short ratio in index futures moved higher to 0.34 - this ratio, however, still implies that foreign investors hold near about 3 short positions in index futures for every long position.  On similar lines, proprietary traders’ long-short ratio dropped to 0.44 - the lowest since September 24. This ratio indicates proprietary traders now hold more than 2 short bets for every long trade in index futures.  On the other hand, retail investors' increased bullish bets in index futures as the long-short ratio rose by another 7 basis points to 2.23, shows data. Retail investors, now, hold more than 2 long positions in index futures for every short bet.  Stocks in F&O ban period today, November 21  Aarti Industries, Aditya Birla Fashion Retail, GNFC, Granules India, Hindustan Copper and Indraprastha Gas are the 6 stocks placed under F&O ban period on Thursday.