FIIs start March F&O series with short bets in Nifty, Bank Nifty futures

Key takeaways from F&O data: FIIs bearish; retail, DIIs hold bullish bets in index futures. Nifty, Bank Nifty options data indicates a bearish stance in the market.

Derivative Market Update: Foreign Institutional Investors (FIIs) are starting the March series with a bearish bias, shows the National Stock Exchange (NSE) futures & options data. FIIs seem to have rolled-over the short bets from February series to the March series.  According to the data, FIIs long-short positions ratio in index futures stands at 0.19 - this ratio implies that FIIs hold more than 5 short positions in index futures for every long bet. FIIs have been holding such bearish positions since the start of the January series, when the Nifty quoted around 23,800 levels, Bank Nifty at 51,300 and MidCap Nifty around 12,800 levels. Since then, these three most traded index futures on the NSE have declined 5.3 per cent, 5 per cent and 13.6 per cent, respectively.  When compared to the February series, FIIs are seen holding 12.5 per cent more open positions in index futures, primarily in Bank Nifty futures.  In the recently concluded February series, Nifty shed 3 per cent; Bank Nifty 1.1 per cent and the MidCap Nifty 6.3 per cent.  Technically, on the daily chart, Nifty trading action on Thursday indicates indecisiveness; however, the index managed to defend the 22,500 support level. As long as Nifty holds 22,500, a pullback rally towards 22,700 - 22,800 is possible, while a firm break below 22,500 could trigger further selling pressure towards 22,300-22,100, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates in a note.    What are the trading bets of other key participants?  In comparison to FIIs, the other key participants namely - domestic institutional investors (DIIs), retail investors and proprietary traders are seen holding bullish bets in index futures. Among these, retail investors remain the most bullish lot, with a long-short ratio of 2.7 - this ratio implies presence of more than 5 long positions in index futures for every 2 short trades. Retail investors' long-short ratio has been around 2.5 or so since mid-January 2025.  Meanwhile, DIIs long-short ratio in index futures stands at 1.5 and proprietary traders at 1.3.  Nifty, Bank Nifty options cues  The Nifty options trends maintain a bearish bias, with CALL writers continuing to overpower PUT sellers, signalling a defensive stance. A substantial open interest accumulation at the 23,000-strike CALL cements it as a formidable resistance zone, while significant PUT accumulation at the 22,500-strike establishes a solid base at lower levels, said Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities in a note.  The 22,600 – 23,000 range remains under heavy CALL writing pressure, whereas rising PUT activity at lower strikes signals an on-going tug-of-war between bulls and bears, highlighting market fragility. The Put-Call Ratio (PCR) climbed to 0.78 from 0.63, hinting at a marginally improving sentiment, but sellers remain in control despite sporadic buying attempts, the analyst explained.  In the case of Bank Nifty, too, derivatives data continues to favour a bearish stance. A surge in open interest at the 49,000-strike CALL solidifies this level as a strong resistance, while substantial PUT writing at the 48,000 strike suggests that buyers are actively defending lower levels.  The 'Max Pain' level at 48,900 hints that any sharp decline could attract buyers, providing short-term support unless a decisive breakdown occurs, which could trigger accelerated selling pressure, the note from SAMCO Securities stated.