FIIs add short bets in Bank Nifty amid Tuesday fall; check details here

FIIs were net sellers in index futures for the fourth straight day yesterday. Open positions in Bank Nifty rose by nearly 12% amid the market fall. Here's what experts have to say.

Equity market witnessed a steep fall in Tuesday's trading session, after the key benchmark indices broke key levels on the back of persistent selling pressure.  The NSE Nifty 50 index and its counterpart Nifty February futures plunged 1.3 per cent each to settle at 23,072 and 23,153, respectively; thus implying that the futures ended at a 81-point premium to the spot Nifty.  From a technical standpoint, a negative crossover in the RSI and plunge below 20-DEMA has added to a bearish setup on the Nifty, said Osho Krishnan, Sr. Analyst, Technical & Derivatives at Angel One.  If Nifty declines below the 23,000-mark, this could further intensify the downtrend towards 22,800 - 22,750 in the near-term. Conversely, any rebound towards 23,250 - 23,350 is likely to act as an intermediate resistance, followed by significant obstacles around 23,400 (20-DEMA) and 23,500, the analyst said in a note.  Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates expects the Bank Nifty to fall to 48,900 levels.  "Technically, the Bank Nifty has formed a big red candle on daily scale and broken the support zone of 49,650 - 49,700. Thus, 49,700 will act as an immediate hurdle for Bank nifty, with the next key support at 48,900.", said Hrishikesh in a note.  FIIs, DIIs, retail investors trading activity  Meanwhile, on Tuesday, foreign institutional investors (FIIs) net sold index futures worth Rs 1,684.51 crore. In the last four trading sessions, FIIs have net sold index futures to the tune of Rs 5,558.72 crore.  According to data from the National Stock Exchange (NSE) derivatives segment, FIIs seem to have added significant short positions in Bank Nifty yesterday. They net sold 10,962 contracts of index futures yesterday, which included a net sale of 7,360 contracts of Bank Nifty alone. FIIs open interest (OI) in Bank Nifty futures rose by 11.7 per cent to 74,856 contracts at the end of the day.  Data also shows that FIIs added additional short bets in Nifty and Bank Nifty. The overall long-short ratio in index futures remained at 0.17; implying presence of near about 6 short positions in index futures for every long bet.  Among the other participants, retail investor trimmed their long bets in index futures with the long-short ratio dropping from 2.60 to 2.44. Whereas, domestic institutional investors (DIIs) and proprietary traders added long bets, with the ratio now rising to 1.30 and 1.74, respectively.  Cues from the Nifty, Bank Nifty options data  The Nifty options data shows that the Put-Call Ratio (PCR) dropped to 0.53 from 0.59, reinforcing the shift in sentiment towards the downside. The 'Max Pain' level now stands at 23,300, and suggests a limited downside, said  Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities.  The Nifty 24,000-strike Call witnessed a sharp increase in OI, reinforcing it as a stiff resistance level. On the flip side, Put writing at the 22,500 strike (91.19 lakh contracts) indicates a strong support zone on the downside, the analyst said in a note.  In the case of Bank Nifty, options data reflects a shift in market control toward the bears. The 51,000-strike Call witnessed a notable surge in OI, cementing it as a strong resistance level. Meanwhile, put writing at the 49,000 strike highlights a robust support zone on the downside.  The PCR further slid to 0.79 from 0.82, signalling an intensified bearish sentiment, with the 'Max Pain' level now at 50,000 suggests limited downside risk for now.