F&O Cues: DIIs net long in Nifty highest in 2 months; futures premium sink

Derivatives market update for Sept 03: The Nifty September futures premium tumbled from Rs 141 on Friday to Rs 61 on Monday. DIIs added fresh longs in Nifty futures, while FIIs sold.

F&O Cues for Tuesday, September 03, 2024: Even as the NSE Nifty 50 index extended its winning run to the 13th straight day yesterday, the NSE September futures ended in red, down 0.1 per cent at 25,340. This was primarily on account of a sharp fall in Nifty futures premium from Rs 141 to Rs 61. On Monday, the Nifty September futures open interest (OI) rose by mere 1.3 per cent.

Meanwhile, the Bank Nifty September futures ended almost unmoved, with a slight addition in OI. The Bank Nifty futures premium also took a sharp knock from Rs 312 to Rs 211.

Key Insights from Nifty, Bank Nifty Options data:

The Nifty options market has shown signs of a bearish bias, with a higher volume of calls being written compared to puts. This shift in sentiment marks the end of a one-week bullish streak where puts were more heavily written, said Dhupesh Dhameja, Technical Analyst at SAMCO Securities in a note.

Significant open interest at the 25,000 Put (61.28 lakh contracts) and the 25,300 Call (66.42 lakh contracts) reflects a cautious stance, as call writers adjust to lower levels, creating strong resistance.

The Put-Call Ratio (PCR) has decreased from 1.27 on Friday to 0.96, underscoring the dominance of call writers. The PCR, which had been on an upward streak, has now sustained above 1 throughout the week, signaling a cautionary trend. The Max Pain Point at 25,200 marks a critical level that could influence near-term Nifty movement, said Dhupesh Dhameja.

In case of Bank Nifty, options data shows significant open interest at the 51,500 Call (39.33 lakh contracts) and the 51,000 Put (25.96 lakh contracts), with active trading around the 51,400-51,600 Calls and 51,200-51,100 Puts.

The Put-Call Ratio (PCR) has slightly decreased from 0.88 on Friday to 0.85, indicating a sideways to bearish sentiment. The Bank Nifty has been unable to find direction, remaining muted within the 51,500-51,000-trading range over the past six sessions, leading to dull momentum. The Max Pain Point, concentrated at 51,500, is a critical level to monitor for potential shifts in the index's direction, the note from SAMCO added.

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 September 02?

As per data from the NSE, FIIs net sold 10,187 contracts of index futures on Monday for a consideration of Rs 600.18 crore. FIIs net sold 13,256 contracts of Nifty futures and 203 contracts of MidCap Nifty futures, while bought 3,198 contracts of Bank Nifty futures.

FIIs were net sellers in Nifty futures for the first time in the last six trading sessions, indicating possible profit-taking given the continuous rally in the Nifty.

Pursuant to which, FIIs long-short ratio in index futures dipped to 2.3:1 – this ratio implies that foreign investors now hold near about 5 long positions in index futures for every 2 bets on the short side of trade. The FIIs longs in index futures stood at 69.96 per cent as of yesterday.

Meanwhile, domestic institutional investors (DIIs) net bought 18,347 contracts of index futures, mainly absorbing what FIIs sold. In the process, DIIs index futures long-short ratio rose to its highest level since June 19 to 0.77; with net index longs at 43.48 per cent.

On the other hand, retail traders' trimmed some of their short bets, as the long-short ratio rose to 0.67.

Bullish & Bearish stocks

Gujarat Gas, which was the top gainer among the F&O stocks up 11 per cent on Monday, saw mere 1 per cent rise in open interest (OI). Some long positions were seen added in GNFC as the stock advanced 1.4 per cent backed by a 5.3 per cent rise in OI.

On the other hand, Hindustan Copper and Indraprastha Gas saw some shorts been added as the stocks declined 3.8 per cent and 1 per cent accompanied with a 16.8 per cent and 11.1 per cent increase in OI.

Stocks in F&O ban period

Balrampur Chini is the only stock in futures & options ban period on Tuesday.