RBI Policy: Will Bank Nifty fall to 50K or hit 52K today? Key levels here

Derivatives market update Oct 09: NSE F&O data shows that retail investors' are most bullish since the Lok Sabha poll outcome in June; their long-short ratio in index futures rose to 1.44.

Futures & Options (F&O) Insights for Wednesday, October 09, 2024: Benchmark equity indices snapped the six-day losing streak on Tuesday amid lower volumes in the derivative segment. The data from the National Stock Exchange (NSE) also shows a remarkable drop in premium in both Nifty and Bank Nifty futures.

The Bank Nifty is likelyy to remain in focus today on account of the RBI policy outcome and the weekly options expiry.

Here's all you need to know:

The NSE Nifty October futures ended 0.6 per cent higher at 25,132, while the open interest (OI) rose by 1.5 per cent and the premium dropped from 190 points to 119 points. 

 

On the technical front, a bullish 'Harami' formation is being seen on the daily time frame, and a follow-up buying emergence would likely confirm the same, said Osho Krishan, Senior Analyst Technical & Derivatives of Angel One in a note.

On the level-specific front, 24,800 withheld significant support, and a decisive breakdown could only trigger a fresh round of sell-off in the market towards 24,700, followed by the 24,500 zone. On the higher end, a series of resilience is seen around the 25,100 - 25,300, the analyst said. 

Meanwhile, the Bank Nifty futures had gained 0.7 per cent, while the OI declined by 3.2 per cent and the premium for the October series tumbled to 372 points from 537 points.

Technically, the Bank Nifty formed an insider bar candle near the previous demand zone, indicating strength. As long as the index holds above 50,190, a 'buy on dips' strategy is advisable. On the upside, 51,800 will act as a short-term hurdle for Bank Nifty, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates in a note.

FII, DII trading activity in F&O on October 087 - Who bought and who sold in the derivatives market on Tuesday?

Foreign institutional investors (FIIs) remained net sellers in the F&O segment for the sixth straight trading session on Tuesday. As per data available from the NSE, FIIs net sold 40,271 contracts of index futures for a consideration of Rs 2,447.55 crore. 

The NSE data shows that FIIs net sold 43,906 contracts of Nifty futures worth Rs 2,751.66 crore. Whereas, they were net buyers of 4,912 contracts of Bank Nifty futures and 490 contracts of MidCap Nifty futures.

The open interest (OI) data suggests that FIIs seemed to have added some short bets in Nifty futures, while covering few of the short positions in Bank Nifty. The OI in Nifty futures rose by 3.0 per cent, while in case of Bank Nifty it remained more or less unmoved compared to the previous trading session. FIIs also seemed to have covered some short positions in MidCap Nifty futures.

Pursuant to which, the FIIs long-short ratio in index futures dipped to 0.77 from 0.88 the day before. On the other hand, DIIs and retail investors, both, upped their bullish bets on index futures. DIIs added 11,573 contracts on the long side in index futures on Tuesday.

Meanwhile, retail investors’ long-short ratio rose to 1.44 from 1.35. This ratio reveals that retail investors are now most bullish in more than four months (i.e. post Lok Sabha elections outcome) with 59 per cent OI in index futures on the buy side.

Proprietary traders, on the other hand, reduced both the bullish and bearish bets in index futures.

Key Insights from Nifty, Bank Nifty options data

Despite Nifty's recovery, bearish sentiment remains in the options market, with call writing outpacing put writing ahead of the upcoming Monetary Policy. Significant open interest is seen at the 26,000 Calls (98.12 lakh contracts) and 24,000 Puts (71.41 lakh contracts), with active trading between 25,000 - 25,100 calls and 24,800 - 24,900 puts, suggesting resistance around the 25,050 - 25,100 zone, said Dhupesh Dhameja, Technical Analyst at SAMCO Securities.

Increased put activity between 24,700 - 24,900 indicates a shift to higher positioning, while call unwinding points to rising bullish momentum. The put-call ratio (PCR) rose to 0.68 from 0.45, maintaining a bearish tone. The max pain level is currently at 25,100, acting as a key pivot for future moves.

In case of Bank Nifty, notable open interest is concentrated at the 53,000 calls (34.01 lakh contracts) and 50,000 puts (25.60 lakh contracts), with trading activity focused between 51,100 - 51,200 calls and 50,800 - 50,900 puts, indicating a mildly bullish sentiment. 

Resistance is expected around 51,100 - 51,200. Increased put activity at 50,800 - 50,900 indicates a shift in positioning, while call unwinding suggests strengthening bullish momentum. The put-call ratio (PCR) has risen to 0.67 from 0.53, reflecting a cautious market outlook. Max pain is currently positioned at 51,200, a pivotal level for future moves, the SAMCO Securities analyst said in a note.

Bullish & Bearish stocks

Among individual F&O stocks, IPCA Labs and MCX India saw fresh long build-up yesterday as these stocks rallied up to 4 per cent each, backed by a 10.2 per cent and 9 per cent increase in OI. Among others, Can Fin Homes, Dr Lal Path Labs and Atul also witnessed some buying interest.

Meanwhile, short build-up was visible at the Godrej Consumer Products counter, as the stock slipped 2 per cent alongside a 9.8 per cent jump in OI. SBI Life Insurance was the other stock with notable selling bias.

Stocks in F&O ban period on Wednesday, October 09

A total of 10 stocks are placed under the futures & options ban period today. Bandhan Bank, Birlasoft, GNFC, Granules India, Hindustan Copper, IDFC First Bank, Manappuram Finance, PNB, RBL Bank and SAIL.