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Futures & Options (F&O) Insights for Monday, October 28: The Nifty October futures have tumbled around 8 per cent or more than 2,000 points in the last one month. Among the key participants, FIIs had turned bearish on October 10, while proprietary traders' turned bearish two days back; whereas, retail investors have remained net long.
Technically, the Nifty formed a bearish candle on both daily and weekly charts, indicating weakness. The 150-day Exponential Moving Average (DEMA) is placed near 23,950, along with the previous swing low at 23,893. Thus, index may find good support in the 23,900 – 23,950 range, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates in a note.
In case of Bank Nifty, the index found support near its 150-DEMA and trend line support near 50,380. As long as Bank Nifty respects this level, a bounce to 51,000 is feasible, said Hrishikesh Yedve.
Key Insights from Nifty, Bank Nifty options data
A minor short covering in the last hour of Friday's trading session helped the Nifty recover some of the lost ground. On lower side, the Nifty will find strong support around 24,000 levels as maximum put writing has been seen around those levels whereas on higher side, call writing at 24,400 & 24,500 will act as immediate resistance, said Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth
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Active trading in the 24,300 – 24,500 Call range and the 24,000 – 24,200 Put range indicates that resistance has shifted lower to 24,300 – 24,500, while support now lies between 24,000 and 24,200, explains Dhupesh Dhameja, Technical Analyst at SAMCO Securities.
The put-call ratio (PCR) has risen from 0.76 to 0.87, pointing to a growing bearish sentiment as call writers take the lead. The 'max pain' level stands at 24,700 for the Nifty.
Meanwhile, the break of 51,000 level, where substantial Put writers held positions, has contributed to the bearish sentiment on the Bank Nifty. Currently, the index is trading below both the 10- and 20-day Exponential Moving Averages, which are acting as robust resistance levels, said the analyst from SAMCO Securities.
FII v/s Retail v/s Proprietary traders: Who is bullish / bearish?
Foreign institutional investors (FIIs) net bought 17,753 contracts of index futures for Rs 965.18 crore on Friday. The NSE data shows that FIIs net bought 23,794 contracts of Nifty futures to the tune of Rs 1,432.35 crore; and sold 5,670 contracts of Bank Nifty futures worth Rs 444.93 crore and 573 contracts of MidCap Nifty futures for Rs 35.30 crore.
The data shows that FIIs open interest (OI) in Nifty futures contracts declined by 1.3 per cent on Friday, thus implying some short-covering. Bank Nifty futures OI increased by 2.1 per cent, MidCap Nifty by 0.4 per cent.
Pursuant to which, the FIIs overall long-short ratio in index futures rose by 4 basis points (bps) to 0.58. This ratio, however, still implies that FIIs hold near about 2 short positions in index futures for every bullish trade position.
Meanwhile, retail investors' long-short ratio in index futures increased by 10 bps to 1.92. Retail investors continue to hold bullish bets since October 10. The Nifty has lost 800 points during this period. The ratio implies that retail investors now hold nearly 2 bullish positions in index futures for every short trade.
Proprietary traders have turned bearish with the long-short ratio now at 0.53 as against 1.09 two trading sessions ago. Proprietary traders' too are now holding 2 short bets in index futures for every bullish position.
Stocks in F&O ban period on Monday, October 28
A total of 10 stocks are placed under the futures & options ban period today. Aarti Industries, Bandhan Bank, Dixon Technologies, Escorts, IDFC First Bank, IndiaMart InterMesh, L&T Finance, Manappuram Finance, NMDC and RBL Bank.
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