Nifty remains trapped in 24,000-24,500 range; probability of bounce higher

F&O cues for Nov 12: Options data hint support for Nifty at 23,950; with a high probability of a bounce back towards 24,500 - 24,700; says Sahaj Agarwal of Kotak Securities.

Futures & Options (F&O) Insights for Tuesday, November 12: The NSE Nifty 50, yet again, failed to hold on to the gains in Monday's trading session, as bears continue to exert pressure. 

 

Technically, on a daily chart, the Nifty formed a 'doji' like candle, indicating uncertainty. On the higher side, the 100-days exponential moving average (DEMA) hurdle is placed near 24,430 followed by 24,540, which was last week's high. On the downside, 150-days exponential moving average (DEMA) is placed near 24,990, which will act as short term support for the Nifty followed by 23,800, says Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates.

 

 

Meanwhile, the Bank Nifty has been consolidating in the range of 50,500 to 52,580 from the last few weeks. If the index sustains above 52,580, then only fresh up move could be possible, otherwise, the index will continue its consolidation, the analyst added.

 

Key Insights from Nifty, Bank Nifty options data

 

The Nifty options data suggests support at 23,950; with a high probability of a bounce back towards 24,500 - 24,700, says Sahaj Agarwal, Senior Vice President, Head of Derivatives Research at Kotak Securities.

 

We expect volatility within this range to continue, with a period of time consolidation likely before directional momentum returns to the broader markets. On the downside, a breach of 23,950 could push the index toward the 23,300-23,500 levels, the analyst added. 

 

The highest open interest sits at the 24,500 Call and 24,000 Put. The increased Call writing from 24,200 to 24,500 points towards growing strength among the sellers, while the reduced put writing signals rising bearish momentum, explains Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities. 

 

A modest rise in the Put-Call Ratio (PCR) from 0.67 to 0.72 indicates cautious sentiment as sellers continue to maintain control. The max pain level for the Nifty stands at 24,300.

 

In the case of Bank Nifty, increase Call writing is seen between 52,000 and 52,500, while a reduction in put writing indicates a rise in bearish momentum. The PCR has shifted up from 0.64 to 0.83. The max pain level stands at 52,000, says Dhupesh.

 

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

 

Foreign institutional investors (FIIs) were net buyers of index futures after three trading sessions, they net purchases totalled Rs 335.48 crore on Monday. FIIs net bought 4,513 contracts of Bank Nifty futures to the tune of Rs 353.23 crore and 249 contracts of MidCap Nifty futures for Rs 15.49 crore. FIIs, however, were net sold Nifty futures worth Rs 26.50 crore.

 

The NSE F&O data shows that the FIIs open interest (OI) in Nifty futures increased by 2.5 per cent to 1.45 lakh contracts, while declined by 2.2 in the case of Bank Nifty futures to 1.35 lakh contracts.

 

Pursuant to which, FIIs long-short ratio in index futures inched a tad higher to 0.33. This ratio implies that foreign investors hold almost 3 short positions in index futures for every long trade.

 

Meanwhile, retail investors' long-short ratio eased by 10 basis points (bps) to 1.95; still suggesting presence of around 2 long positions for every short bet. Proprietary traders, on the other hand, saw a 14 bps jump in the long-short ratio to 0.74 - now implying presence of 3 bearish positions for every 2 bullish bets in index futures.

 

Stocks in F&O ban period today, November 12

 

Aarti Industries, Aditya Birla Fashion Retail, Granules India, Hindustan Copper and Manappuram Finance are the 5 stocks placed under F&O ban period on Tuesday.