Experts see Nifty 22,000 as key support; DIIs long bets highest in 1 year

Key takeaways from F&O data: Substantial PUT accumulation at the Nifty 22,000 strike solidifies this level as a reliable support base, says Dhupesh Dhameja of SAMCO Securities.

Derivative Market Update: In the first two sessions of the March series, the NSE Nifty March futures declined almost 2 per cent to 22,260 levels, amid a 7 per cent increase in open interest (OI). Meanwhile, the Nifty 50 index was seen hovering around the 22,100 levels.  During the same period, the Bank Nifty futures were down 1.3 per cent on 0.5 per cent rise in OI. The Bank Nifty futures were seen trading at a premium of 280 points as of Monday.  Though, Nifty showed minor upside recovery from the lows, the underlying trend remains negative, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities in a note.  Any upside bounces from here could encounter resistance around 22,300 levels. A decisive move above 22,500 levels could confirm short term bottom reversal in the Nifty. On the other side, further fall below 22,000 levels could find next support around 21,800 - 21,700 band, Nagaraj said.  That apart, cues from Nifty options market also indicates presence of a bearish bias, with 22,000-mark seen a key support by analysts.    The significant open interest build-up at the 22,500 CALL marks it as a robust resistance level. Meanwhile, substantial PUT accumulation at the 22,000 strike solidifies this level as a reliable support base, says Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities.  The 22,050 – 22,500 range remains under severe CALL writing pressure, while a shift in PUT writing to lower strikes further underscores the bearish tone. The Put-Call Ratio (PCR) has sharply dropped from 0.86 to 0.71, highlighting the prevailing negative sentiment among market participants, Dhupesh explained.  In the case of Bank Nifty, options data presents a neutral outlook. A significant OI build-up at the 49,000 CALL establishes it as a formidable resistance zone. Meanwhile, notable PUT writing at the 48,000 solidifies strong support at lower levels.  Options sellers remain in control, despite sporadic buying interest. The 'Max Pain' level at 49,000 points to potential short-term buying interest, which may help cushion declines amid persisting volatility, the note stated.  How are FIIs, DIIs, Retail Investors placed in F&O?  Analysis of data from the National Stock Exchange (NSE) derivatives segment shows that domestic institutional investors (DIIs) long-short ratio in index futures is at the highest in more than a year. The present the long-short ratio stands at 1.98 - this ratio implies that DIIs hold 2 long positions in index futures for every short bet.    DIIs long-short ratio at the end of February series stood at 1.5. Thus, the data clearly shows that DIIs have added long bets in the last two trading sessions. According to the NSE data, DIIs have net bought near about 17,000 contracts of index futures, a combination of Nifty, Bank Nifty among others, in the last two days.  On the other hand, retail investors and proprietary traders have pared some of their long positions in the same period. Retail investor’s long short ratio in index futures declined from 2.7 to 2.24; while proprietary traders from 1.3 to 1.1.  Foreign institutional investors (FIIs), however, continue to remain extremely bearish on the Indian markets, with a long short ratio of 0.2 - meaning 5 short positions in index futures for every long holding.