Futures & Options (F&O) Insights for Friday, November 08
Over the past four trading sessions, the NSE Nifty 50 index has shown significant intra-day fluctuations, swinging around 1 percent or more than 300 points. These moves reflect a broader uncertainty attributed to the recent US elections and the Federal Reserve’s interest rate decision. Now, with the election outcome—Donald Trump winning the US presidency—and the Fed’s 25-basis-point rate cut in place, Indian markets may seek stability and direction. However, the ongoing Q2 earnings season could still drive volatility in individual stocks, as investor sentiment remains sensitive to earnings reports.
Technical Analysis: Nifty 50 Levels to Watch
After recently bottoming out at 23,816, the Nifty 50 index has rebounded, testing resistance at its 20-Day Moving Average (20-DMA). Moving forward, the index’s 20-DMA at 24,527 and 100-DMA at 24,703 will serve as critical resistance points. On the downside, recent lows might provide support; however, a dip below these could push the index toward its 200-DMA, around 23,500, acting as a lower support level.
Key Insights from Nifty and Bank Nifty Options Data
Options data from the Nifty index signals a cautious approach among traders, with call writing concentrated in the 24,250-24,500 range, which establishes a resistance area near 24,500. On the other hand, put activity between 23,900 and 24,150 suggests support around 24,000. Dhupesh Dhameja, a Technical Analyst at SAMCO Securities, notes that these levels reflect a generally bearish sentiment.
The Nifty Put-Call Ratio (PCR) has slipped slightly from 0.67 to 0.65, showing cautiousness in the market. The “max pain” level—indicating the price at which option buyers would experience the maximum loss—currently sits at 24,200.
For Bank Nifty, options data also indicates bearish sentiment. The bulk of trading activity is concentrated in the 52,100–52,500 call range and the 51,500–52,000 put range, which suggests resistance around 52,300–52,500 and support near 51,700–52,000. Dhameja added that the Bank Nifty PCR has held steady at 0.72, indicating that call writers are maintaining control with max pain at 52,100.
Market Sentiment: FIIs, Retail, and Proprietary Traders
Foreign Institutional Investors (FIIs) displayed a cautious outlook, evidenced by significant net selling in index futures. On Thursday, FIIs were net sellers of index futures worth ₹1,146.43 crore. Specifically, they net sold 17,460 Nifty futures contracts worth ₹1,064.54 crore, 364 Bank Nifty futures contracts worth ₹27.81 crore, and 582 MidCap Nifty futures contracts for ₹36.81 crore.
The F&O data from the NSE shows that FIIs’ open interest (OI) in Nifty futures increased by nearly 11 percent, suggesting the addition of short positions in the index. The OI in Bank Nifty futures rose by 4.4 percent, while MidCap Nifty futures remained steady. The FIIs’ long-short ratio in index futures fell by three basis points (bps) to 0.32, implying that FIIs currently hold around three short positions for every long trade.
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Retail investors, on the other hand, are showing a more bullish sentiment. Their long-short ratio in index futures increased by 10 bps to 2.07, indicating more than two long positions for every short. In contrast, proprietary traders have maintained a bearish stance, with two short positions for every long in index futures.
Stocks in F&O Ban Period for November 08
As of today, two stocks are under the F&O ban period: Aditya Birla Fashion Retail and Granules India. This ban is triggered when the total open interest in these stocks crosses a specified threshold, signaling heightened activity and speculation.
Market Outlook: Stabilization or Continued Volatility?
With major external events now behind, the Indian market may strive to stabilize. However, the Nifty index’s near-term movement will be dictated by Q2 earnings results and global cues. While technical indicators provide crucial resistance and support levels, investor caution persists, especially given the recently established short positions by FIIs. In the coming sessions, market participants are likely to keep a close eye on Nifty’s movement around the 20-DMA and 100-DMA, as well as Bank Nifty’s resistance at 52,500. The cautious positioning in options and the shifting sentiment between FIIs, retail investors, and proprietary traders will remain key factors in shaping the market’s path in the short term.
