Nifty rebound attempt fizzles, sellers reinforce resistance; shows F&O data

F&O cues for Nov 11: Nifty's outlook has shifted to a bearish-to-sideways bias, as multiple rally attempts have been thwarted by sellers, says Dhupesh Dhameja of SAMCO Securities.

Futures & Options (F&O) Insights for Monday, November 11: The key support on the Nifty at 24,000-mark may be tested on Monday given the weak cues from global peers. The Nifty has recovered smartly from sub-24,000 levels last week to hit a high of 24,567. The rally, however, seems to be fizzling at the moment with the Nifty ending the week at 24,148.

 

On the daily charts, the Nifty seems to be in the process of retracing the rise it witnessed from 23,800 to 24,500. Currently, it is trading around the 61.82 per cent Fibonacci retracement level (24,090) which is likely to provide support and holding which can lead to resumption of up move, explains Jatin Gedia - Technical Research Analyst at Sharekhan by BNP Paribas.

 

 

The analyst, however, cautioned that a break below 23,970 could weaken the structure.

 

Meanwhile, Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates highlights that the Nifty continues to respect the 150-day exponential moving average (DEMA) support near 23,990, as well as recent swing support near 23,800.

 

In the immediate term, the Nifty may consolidate in the range of 23,800 to 24,700. A decisive breakout on either side will determine the next direction of the Nifty, Hrishikesh adds.

 

In the case of the Bank Nifty; the index has been consolidating around the range of 50,500 to 52,580. The index has formed higher lows but was unable to cross the barrier of 52,580. On the downside, the Bank Nifty is obeying the 150-days exponential moving average (DEMA), which is close to 50,550 levels. If the index sustains above 52,580, then only a fresh up move could be possible, otherwise, the index will continue its consolidation, the analyst from Asit C. Mehta added.

 

Echoing similar views, Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth believes that the Bank Nifty is stuck in broad range of 50,800 - 52,500; with immediate support seen around 51,200 - 51,000 levels. Pullback from these levels can drive the Bank Nifty towards its resistance zone of 51,800 - 52,200 levels.

 

Key Insights from Nifty, Bank Nifty options data

 

The Nifty options data indicates a cautious stance among traders, with substantial call writing signalling a broadly bearish sentiment. Notable call writing from 24,200 to 24,500 implies resistance around 24,500, while put activity in the 23,800 – 24,100 range emphasizes support at the 24,000 level, explains Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities. 

 

The slight uptick in the put-call ratio (PCR) from 0.65 to 0.67 reflects a cautious sentiment, as sellers continue to maintain control. The 'max pain' level for the Nifty stands at 24,500.

 

The Bank Nifty options data too shows a bearish sentiment, with call-writing activity significantly outweighing put writing. Major activity is concentrated between the 51,800 – 52,000 Call range and 51,200 – 51,500 Put range, suggesting resistance near 52,000 and support around 51,000, said Dhupesh.

 

The increase in call writing between 51,800 and 52,000 indicates that sellers are strengthening their positions, while a decrease in put writing signals growing bearish momentum.

 

The PCR has decreased from 0.67 to 0.64, reflecting a shift towards a more cautious market sentiment. The 'max pain' level for Bank Nifty stands at 52,000, the analyst stated.

 

FII v/s Retail v/s Proprietary traders: Who is bullish/ bearish?

 

Foreign institutional investors (FIIs) were net sellers of index futures worth Rs 314.42 crore on Friday. FIIs net sold 3,619 contracts of Nifty futures to the tune of Rs 218.47 crore and 1,418 contracts of Bank Nifty futures worth Rs 110.49 crore. They net purchased 226 contracts of MidCap Nifty futures for Rs 14.40 crore.

 

The NSE F&O data shows that the FIIs open interest (OI) in Nifty futures rose by 0.9 per cent to 1.42 lakh contracts and Bank Nifty by 2 per cent to 1.39 lakh contracts.

 

Pursuant to which, FIIs long-short ratio in index futures remained unchanged at 0.32. This ratio implies that FIIs hold almost 3 bearish positions in index futures for every long trade.

 

Meanwhile, retail investors' long-short ratio stood at 2.05; indicating more than 2 long positions for every short trade. Proprietary traders, on the other hand, hold the opposite trade with 2 bearish bets for every long in index futures.

 

Stocks in F&O ban period today, November 11

 

Aditya Birla Fashion Retail, Granules India and Manappuram Finance are the 3 stocks placed under F&O ban period on Monday.