Max pain for Bank Nifty seen at 50,900; bias seems cautiously positive

F&O cues for Nov 22: Bank Nifty formed a hammer candlestick pattern on Thursday; trade above 50,650 levels can trigger a pullback towards 51,000 - 51,500 levels, says analyst from Asit C Mehta.

Futures & Options (F&O) Insights for Friday, November 22: Rising geo-political worries and negative news for the Adani Group kind-off weighed on the investment sentiment in the recent trading sessions.  On Friday, even as the global cues are favourable persistent FII selling in the cash market and unpredictable news flow could weigh on the market sentiment. That apart, cues from the derivatives market also seem to advocate cautiousness.  Technically, the resistance for the Nifty is positioned at 23,700, which could be a ceiling for any short-term pullbacks. Support remains at 23,180, said Om Mehra, Technical analyst at SAMCO Securities.  Echoing similar view, Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates expects the short-term trend to remain down till Nifty remains below 23,800.  On the positive side, the analyst notes the Nifty has respected the 50-Weekly simple moving average (WSMA), which is placed near 23,300 and short term trend line support which is placed near 23,200. As long as index holds 23,200, short term relief rally could be possible.  Meanwhile, the Bank Nifty has found support near its 200-day simple moving average (DSMA) and formed a hammer candlestick pattern, indicating strength. According to the hammer candle, if the Bank Nifty sustains above today's high of 50,652, a pullback to the 51,000 - 51,500 levels is possible, said Hrishikesh.  Key Insights from Nifty, Bank Nifty options data  The Nifty options market reflects a bearish bias, with intense call-writing activity at higher levels. The 24,000-strike call recorded the largest open interest (63.33 lakh contracts), while significant put positions were noted at the 23,000-strike level (59.37 lakh contracts), said Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities.  The put-call ratio (PCR) edged up to 0.85 from 0.65, reflecting a neutral-to-bearish sentiment as sellers maintain the upper hand. The max pain level stands at 23,400 for the Nifty in the short term.  In the case of Bank Nifty, key activity was observed in the 50,600 – 50,900 Call range and the 50,000 – 50,500 Put range, reinforcing immediate resistance near 51,000 and support around 50,000. The PCR edged slightly lower to 0.90 from 0.91; and the max pain level for Bank Nifty now stands at 50,900, Dhupesh explained.  FII v/s Retail v/s Proprietary traders: Who is bullish/ bearish?  Foreign institutional investors (FIIs) were net sellers of 9,524 contracts of index futures to the tune of Rs 598.60 crore on Thursday. FIIs net sold 7,964 contracts of Nifty futures for Rs 467.07 crore, 2,478 contracts of Bank Nifty futures for Rs 187.71 crore; while net purchased 827 contracts of MidCap Nifty futures worth Rs 50.36 crore.  As a result of which, the NSE F&O data shows that FIIs open interest (OI) in Nifty futures increased by 2.3 per cent, Bank Nifty by 2.4 per cent and MidCap Nifty futures by 3.5 per cent.  Pursuant to which, FIIs long-short ratio in index futures moved dropped to 0.33 - suggesting some short additions in trades yesterday. This ratio also implies that foreign investors hold more than 3 short positions in index futures for every long trade.  Whereas, proprietary traders' long-short ratio jumped to 0.53 - up 9 basis points (bps) - this ratio indicates proprietary traders hold more than 2 bearish bets for every long position in index futures.  On the other hand, retail investors' pared some of their bullish bets in index futures as the long-short ratio dropped by 7 bps to 2.16. Retail investors continue to hold more than 2 bullish bets in index futures for every short trade.  Stocks in F&O ban period today, November 22  Aarti Industries, Aditya Birla Fashion Retail, Adani Enterprises, GNFC, Granules India, Hindustan Copper, Indraprastha Gas and NALCO are the 8 stocks placed under F&O ban period on Friday.